Paid twice in one month

Potbellypig

My partner is a teaching assistant and is starting a new job in September. She has finished for this year and handed her notice in. Her boss sent a letter stating that she will be getting paid July and August together in July. The total amount she was paid was £1780 but she's been taxed on it as if this is her normal amount. She's been taxed £50 and had National Insurance taken off of £130.

I'm not losing the plot am I... This isn't correct is it?

She doesn't usually pay tax because she doesn't earn enough, and the NI is usually £20 odd

chrisbur

Potbellypig wrote: »

My partner is a teaching assistant and is starting a new job in September. She has finished for this year and handed her notice in. Her boss sent a letter stating that she will be getting paid July and August together in August. The total amount she was paid was £1780 but she's been taxed on it as if this is her normal amount. She's been taxed £50 and had National Insurance taken off of £130.

I'm not losing the plot am I... This isn't correct is it?

She doesn't usually pay tax because she doesn't earn enough, and the NI is usually £20 odd

Without actual figures cannot really comment on the tax position, but receiving July and August together and we are still in July suggests to me that August has been paid in advance so it would be correct to tax it as only one month. If there is no taxable income for August a tax rebate will be due for that month which will cancel out the extra tax. If there is income for August then this will mean 13 months salary will be paid for this year so one month has to go without a tax allowance.
To check properly need the following from the payslip....
Taxable gross, tax paid, tax code/basis, month number, taxable pay to date and tax paid to date.
Regarding NI this is wrong if two payments are made together then they should be treated as two payments for NI purposes, this does usually need someone to make a manual adjustment which seems to not have happened.
I will give details of the exact instruction for NI later tonight, unless someone else quotes it first, bit tied up this afternoon.

Potbellypig

chrisbur wrote: »

Without actual figures cannot really comment on the tax position, but receiving July and August together and we are still in July suggests to me that August has been paid in advance so it would be correct to tax it as only one month. If there is no taxable income for August a tax rebate will be due for that month which will cancel out the extra tax. If there is income for August then this will mean 13 months salary will be paid for this year so one month has to go without a tax allowance.
To check properly need the following from the payslip....
Taxable gross, tax paid, tax code/basis, month number, taxable pay to date and tax paid to date.
Regarding NI this is wrong if two payments are made together then they should be treated as two payments for NI purposes, this does usually need someone to make a manual adjustment which seems to not have happened.
I will give details of the exact instruction for NI later tonight, unless someone else quotes it first, bit tied up this afternoon.

Thanks Chris... figures for July (and August combined) are:

Taxable pay: £1780.10
Tax paid: £50.40
Tax code: 988L
No month number but it reset in April
Taxable pay to date: £3549.13
Tax paid to date: £50.40 (this month only)

National insurance on this wage slip: £129.37
Employee NI paid to date: £153.78 (so £24.41 in the previous 4 months!)

The tax code is 988L because she works at a holiday club throughout the year and earns about £1500 from that.

There won't be a wage from this job in August as they have paid the 2 months this month because she is leaving. Apparently, her boss said that she had to pay her the 2 months this month. Which surely is absolute rubbish?

Thanks for your help, Chris.

Potbellypig

I've been looking at this further too and checked with an accountant friend. The tax and national insurance is right in that she's been taxed as if she got paid £1780 in July. If it would have been split as normal then it would be normal minimal payments.

She's now saying that because the workplace is now closed until September and my partner handed her notice in in June (as requested), she is legally entitled to pay her July and August payments in July. Is this correct?

chrisbur

Potbellypig wrote: »

I've been looking at this further too and checked with an accountant friend. The tax and national insurance is right in that she's been taxed as if she got paid £1780 in July. If it would have been split as normal then it would be normal minimal payments.

She's now saying that because the workplace is now closed until September and my partner handed her notice in in June (as requested), she is legally entitled to pay her July and August payments in July. Is this correct?

There is no reason why an employer should not make these payments together provided that they follow the rules for making the payments; that is where the problem is.

I would under these circumstances have followed HMRC guidance for advance payments which would have meant using the tax allowance for month 5 instead of month 4 as has been used.
However this is not going to make any difference overall as the tax deducted will correct itself when the next employment is started. As the next job starts in September that will probably be paid in month 6 (cannot say for certain without knowing payday) when you will get two months tax allowance instead of the usual one. In other words tax will correct itself.

National insurance is a different matter, this will not correct itself in the same way as tax and needs to be corrected by the employer.

Your employer should have treated these two payments separately and worked out the NI on each part. Not worked out NI on the sum of the two payments.

Instructions for making two months payments together are in the CWG2 Employer further guide to PAYE and National Insurance here....

https://www.gov.uk/government/publications/cwg2-further-guide-to-paye-and-national-insurance-contributions/2017-to-2018-employer-further-guide-to-paye-and-nics#sec2

Section 3.2 covers this sort of thing

"3.2 Working out National Insurance contributions for employees not paid on their usual payday
Take the following action if you pay employees on a day other than their usual payday, for example, you bring the payday forward because of a bank holiday or you pay 2 months’ salaries together to employees who submit their timesheets late (mistimed payments).

If the actual date of payment and the usual payday are in the same tax year, treat the early or late payment as if it had been made at its usual time."


Example 2 is for two payments made together one on time and one made in advance. The advice is "Work out National Insurance contributions on each set of earnings separately using the usual earnings period,"

Potbellypig

Thanks for your help Chris. Much appreciated.

JazzyK

I process payroll for schools and cannot envisage any reason why your friend should be paid 2 months salary in July. She is due her August pay as her salary is paid over 12 months, however, she should have been paid it in August itself. Her last working day would be the last day the School was open but her last date of employment (and payment) is the end of the school term which is 31st August. I would ask her to confirm with her school that she has been recorded as such.

dori2o

So long as your partner hands in her P45 to the new employer then they will refund the tax due based on not having had the benefit of 1 months worth of allowances. The NI however wont be recoverable, but will be added to the NI record of your partner.

However, as chrisbur has stated the employer should have worked out the NI by treating it as 2 separate payments..

With this in mind, if the employer is unwilling to rectify, you could write to NI Office and ask them to look at it, quoting the regulations that chrisbur has given. However, they will potentially only review it after the end of the tax year. I'm not sure if they can deal with In Year refunds in the same way that the tax office can.

Potbellypig

Thanks for your responses. I went back to her with the section 3.2 that Chris posted, and some other words of advice. Her accountant has now split the wages up as per normal and my partner has been refunded the difference.

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