Limited Company Director taking second job advice required.

CES1975

My wife has just started a 2 day a week job in a shop but is a director of our limited company her new employer has asked for a P45 or P46 which she doesn’t have. Can I simply not reduce her salary paid by our company so she doesn’t go over the £12,500 personal allowance? What should she tell her new employer to stop being taxed at 20%?

Dazed_and_confused

P46 was abolished several years ago.

She needs to complete a new starter declaration. She will have to tick statement C which means the new employer will deduct 20% from the first payment.

Once that has happened (she can view the details on her Personal Tax Account to see when the employer reports the payment to HMRC) she can contract HMRC and provide an upto date estimate of how much taxable income she expects to receive from each job (the actual amount for this tax year not an annualised amount).

This will allow HMRC to recalculate her tax codes and, if necessary, issue new ones to each employer.

For example if her estimated pay with the current job was £10,000 (and she hasn't applied for Marriage Allowance or has any company benefits or other complications) she would have a tax code of 1000L with that job and 250T at the new job.

The new employer would automatically refund any tax overpaid* the first time they pay her after getting a new tax code.
*tax code 250T allows her to earn £208/month without paying any tax but as we are already in July she had 3 months worth of this to use so if 250T tax code was first used in month 5 of the tax year she could be paid £1041 before any tax was payable (then add £208/month thereafter).

tacpot12

Yes, you can reduce the salary you pay her by the company so that her combined income is just below her personal allowance. You then need to arrange for her personal allowance to be split across two tax codes; one used by your payroll, the other used by her employers payroll.

The extra money left in the company could be put into her pension so as to avoid the company paying tax on it.

This page gives you the details you need about second jobs and splitting a personal allowance across two tax codes: https://www.moneyadviceservice.org.uk/en/articles/pay-and-tax-when-working-in-more-than-one-job#income-tax-on-second-jobs