Not sure PAYE is being done correctly

coolio_2

I was employed FT then finished around June time. 3-4 weeks later I started in a temp role, via an agency PAYE. My payslip has entire earnings for the year so far. For arguements sake, let's say £30k so far. I looked at an online tax caculator and worked out what tax I should've paid if this was an entire years earnings. I've overpaid on tax by about £300, but underpaid NI by about £1200. Should I raise this with either 'employer'? Could I be stuck with a big bill at the end of the year?

I think my biggest concern is that I want to switch from being PAYE and have my own Ltd company and take dividends and a wage, and I'm wondering how that will impact me then. I'm thinking maybe PAYE it;s the employers responsibility, but as soon as I turn Ltd, I will have to do a tax return and the low NI will come up.

Or have I got this all wrong?!?

kitchen_buff

an average way to work out NI is approx 11% of earnings.
If you go ltd company get a chartered accountact, they will do all the payroll, it will cost you but it is worth it for the hassle free factor, believe me i have done it, went Ltd in may.

coolio_2

I was going to pay someone to do my tax return, a company like 1st Contact. I knwo a lot of people with them, and it's been hassle free and they do free consultancies. Thx for taking the time to reply

chrisbur

coolio wrote: »

I was employed FT then finished around June time. 3-4 weeks later I started in a temp role, via an agency PAYE. My payslip has entire earnings for the year so far. For arguements sake, let's say £30k so far. I looked at an online tax caculator and worked out what tax I should've paid if this was an entire years earnings. I've overpaid on tax by about £300, but underpaid NI by about £1200. Should I raise this with either 'employer'? Could I be stuck with a big bill at the end of the year?

I think my biggest concern is that I want to switch from being PAYE and have my own Ltd company and take dividends and a wage, and I'm wondering how that will impact me then. I'm thinking maybe PAYE it;s the employers responsibility, but as soon as I turn Ltd, I will have to do a tax return and the low NI will come up.

Or have I got this all wrong?!?

Online tax calculators have limitations, they will assume that the wages you enter are broadly equal for the whole year. The tax figure you got assumed that this was your total earnings for the year but we are only about two thirds through the tax year, so your employers will only have used about two thirds of your tax allowance so far. If you finished work now and had no taxable earnings for the rest of the year that overpaid tax would be due back as a rebate. If you wait untill the end of the tax year and then put in your total gross for the year you will get a correct tax figure.
NI is different, for each pay period you get a band of earnings when no NI is due (up to the threshold)then you get a band where it is 11% (threshold to upper earnings limit)and then if you earn enough there is a 1% band(over the upper earnings limit). These figures may be different for some people, if for example they are in a contracted out pension scheme.
NI details at
http://www.bytestart.co.uk/content/taxlegal/9_15/national-insurance-2007-8.shtml
The easiest way to check your NI is to get all your old payslips and put them into the online calculator one by one.