Tax and National insurance

Silverbird65

Really worried my husband was monthly paid but recently left and was paid for 1weeks wages and holiday pay owing. He asked to be paid at the end of the first week of the month. The total was £909 no tax was deducted of national insurance. The tax office have said he owes £95 to be taken weekly from his new employment. What do we do about the NI. He retires next yr and has full stamps for pension. Help us understand if anyone can. I just wish my hubby had waited till the end of the month to get the pay and P45

Thanks

Dazed_and_C0nfused

Silverbird65 said:

Really worried my husband was monthly paid but recently left and was paid for 1weeks wages and holiday pay owing. He asked to be paid at the end of the first week of the month. The total was £909 no tax was deducted of national insurance. The tax office have said he owes £95 to be taken weekly from his new employment. What do we do about the NI. He retires next yr and has full stamps for pension. Help us understand if anyone can. I just wish my hubby had waited till the end of the month to get the pay and P45

Thanks

If that was a payment for a month (payslip would show maybe M06 or tax period 6) then no National Insurance would be payable.  But it still counts as the pay was more than the lower earnings limit.

If he normally earns enough to pay National Insurance each month it shouldn't cause any issues.

But always sensible to check his National Insurance record next spring.

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

SiliconChip

This is really an error by your husband's previous employer: regardless of making his final payment outside their normal payroll schedule they should still have operated PAYE to deduct the correct tax and NI for that payment. I would expect them to be in trouble with HMRC for not doing so. They should also still provide him with a P45, although that might well not be available until their standard payroll run is done.

I'm not convinced that £95 is the correct amount of tax but as long as he does hand over the P45 to his new employer once he gets it the tax should eventually be corrected automatically. However, I don't think that can happen with NI. I'd suggest that he contacts the NI Helpline to ask for advice on how to make the missing payment, although I don't think it's something you should be unduly worried about as a temporary small shortfall isn't going to make any difference to his state pension or any other benefits that he might need to claim.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/national-insurance-enquiries-for-employees-and-individuals

Silverbird65

Thanks for that. I wish he had just waited to be paid the end of the .both. anyway he has full amount required for SP. Will the National Ins get on to him at the end of year. Thanks

Silverbird65

The new employer is weekly paid . They have p45 with Pay and tax to leaving.  Not operated yet.With code basic 12570  but tax office have issued tax code to new employer to get £95 back . So mixed up.

Dazed_and_C0nfused

Silverbird65 said:

Thanks for that. I wish he had just waited to be paid the end of the .both. anyway he has full amount required for SP. Will the National Ins get on to him at the end of year. Thanks

Employees National Insurance is calculated per pay period so he hasn't underpaid anything. 

If he has checked his State Pension forecast and has already accrued £185.15/week (or more) then it definitely won't have any impact on his State Pension.

Silverbird65

Yes but Nat Ins is usually paid on £909 ?

Dazed_and_C0nfused

Not since the Summer 😊

https://www.litrg.org.uk/tax-guides/employment/what-national-insurance-do-i-pay-employee

molerat

If the old employer paid him on a monthly basis then £909 would not incur any tax or NI.  In fact it is possible they could have actually refunded some tax. Why have "the tax office" become involved, if he handed his P45 to the new employer then there should be no need for HMRC to get involved as the PAYE system should sort it out.

Silverbird65

Although he should have waited to the end of the month but asked for it to be paid when he left the first week in the month.bthe new employer haven't used the p45 yet.

Marcon

Silverbird65 said:

Although he should have waited to the end of the month but asked for it to be paid when he left the first week in the month.bthe new employer haven't used the p45 yet.

You keep on saying that he should have waited until the end of the month, but if he left one week into the month, then his leaving date would be the same regardless, and (a) no NI would have be payable either way and (b) the tax position will right itself, via the new employer's payroll, very soon. In short, all will be well and you really don't need to keep worrying.

SiliconChip said:

This is really an error by your husband's previous employer: regardless of making his final payment outside their normal payroll schedule they should still have operated PAYE to deduct the correct tax and NI for that payment. I would expect them to be in trouble with HMRC for not doing so. They should also still provide him with a P45, although that might well not be available until their standard payroll run is done.

There is no error and nothing for which the old employer will be 'in trouble with HMRC'.