No tax deducted from salary

jmb1

Hi guys. Hope this is asked in the right place. I've been running a sole trader business for last 5 years as a sole trader which is continuing, and been filing tax returns via an accountant who has recently retired so can't ask them about this. I've started a new agency temp contract job and for past the months i notice on my pay slips hmrc/payroll haven't been taking any tax from my salary.

I'm wondering is this because I'm self employed and thus already paying enough tax already through self assessment (which is what the agency reckon)? Or is it likely there's a mistake and i should be paying paye tax each month, in addition to my self assessment tax? I realise if it's the latter they'll be chasing me for it eventually so better to inform them but thought I'd ask here first.

molerat

What tax code are they using ? What did you put on the starter check list ? Most likely wrongly applied tax code is to blame which will mean you are underpaying tax.

jmb1

1185L. Starter checklist? assuming you mean the form i filed in when signing with the agency, think they advised i tick employed full time.

chrisbur

jmb1 wrote: »

1185L. Starter checklist? assuming you mean the form i filed in when signing with the agency, think they advised i tick employed full time.

Both A and B on the starter checklist would give you a tax code of 1185L
If A it would be applied on a cumulative basis and if B on non-cumulative basis.
Assuming your earnings are greater than about £988 a month it sounds like you either ticked or have been treated as ticking statement A. This means that you tax free allowance has been backdated to the start of the tax year.

When you do your self assessment for this tax year you will need to complete an employment section as well as details of your self employment. Your tax due will then be calculated on your total employed and self employed earnings less any tax paid on your employed earnings.

jmb1

Thanks yes it's over 998. I don't recall completing a starter checklist. so do I assume ill then have my paye tax due added to my overall tax bill? Would be preferable to have it taken at source,is that not an option?

agrinnall

I would suggest that you check your tax account online to see what the tax code actually is, that will tell you whether it in cumulative of non-cumulative.



My suspicion is that it's cumulative and that you may not have earned enough from PAYE so far this year to reach the threshold at which you will start to pay tax (it's difficult to know without the figures and without knowing how many pay periods you have had - is "past the months" a typo for "past three months"?) but that eventually you will pass the threshold and then any tax that is due will be taken.

jmb1

Yes only been working in job 3 months so you may well be right I think that's what agency said too

Dazed_and_confused

so do I assume ill then have my paye tax due added to my overall tax bill? Would be preferable to have it taken at source,is that not an option?

Your Self Assessment tax bill is based on all your taxable income for the year so yes, if you have extra tax to pay because of this job it will be included in your Self Assessment calculation.

But if you would rather pay some tax as you earn it then you just need to tell HMRC you don't want your tax code to include your Personal Allowance and you should end up with a BR (basic rate) tax code and 20% tax would be deducted.

If you go down this route make sure HMRC send the code to your employer on a non cumulative basis. This means the new tax code will be used going forward but you won't be hit all in one go for 20% tax from the wages already paid (any tax due for the wages already paid will be due via Self Asessment).

jmb1

Thank you to all responders it's very much appreciated

Dazed_and_confused

Whatever happens don't forgot to include your PAYE income on your Self Assessment return.

Irrespective of what happens with your tax code and subsequent tax deductions you have to include the income from this job (and any tax paid) on your return.