Zero Contract Plus Pension

72andcounting

I'm claiming my pension, plus engaged on a Zero Hour working as and when needed. The company have only taken £217.60 in tax on wages of £13,667.94 gross. I have commented on a few occasions to my employer but says it's between me and the HMRC. Now the HMRC have come back and said I owe them £2,654.52 in back tax. Surely if I'm on PAYE it is between my employer and the HMRC to ensure I pay the correct tax. My tax is coming off correctly for my Personal Pension. £2,550.58 on a pension of £15,750.00

Marcon

Your employer can only act in accordance with the tax code supplied direct to them by HMRC. 

Surely you realised that the lack of tax on your PAYE earnings was incorrect?

LinLui

So you have been aware of the fact that you were not paying sufficient tax on your earnings, and your employer has told you that you need to speak to HMRC on more than one occasion. So what did HMRC say when you spoke to them about this? HMRC must have provided the employer with a tax code for you, and the employer isn't at liberty to just change that. 

And whilst I am no expert on tax, even I know that it is my responsibility to pay the correct tax even if I am PAYE. You knew you weren't so I assume you made provision for the demand?

72andcounting

I'm awaiting a reply from HMRC. I have funds available to pay this tax bill, but seems I need to create a direct debit with the HMRC while I'm still working on a ZHC. If I don't work it's clear & simple. PAYE should just be that. Typical HMRC

Marcon

72andcounting said:

I'm awaiting a reply from HMRC. I have funds available to pay this tax bill, but seems I need to create a direct debit with the HMRC while I'm still working on a ZHC. If I don't work it's clear & simple. PAYE should just be that. Typical HMRC

I think the problem may be the fact you work 'as and when'. Presumably you wouldn't be too thrilled if HMRC issued a tax code to your employer which required them to deduct far too much tax, based on a month when you'd done quite a lot of work?

LinLui

Marcon said:

72andcounting said:

I'm awaiting a reply from HMRC. I have funds available to pay this tax bill, but seems I need to create a direct debit with the HMRC while I'm still working on a ZHC. If I don't work it's clear & simple. PAYE should just be that. Typical HMRC

I think the problem may be the fact you work 'as and when'. Presumably you wouldn't be too thrilled if HMRC issued a tax code to your employer which required them to deduct far too much tax, based on a month when you'd done quite a lot of work?

I suspect you are correct. I retire later this year and have a offer of similar "as and when". I have a choice of PAYE or not,  and I was advised not  PAYE by someone who knows a lot more about it than me. I was told that provided I ensure I always have the money to pay the bill,  being freelance would be simpler and I'd have access to some tax savings that wouldn't be available via PAYE. But I suppose it depends on whether the OP could benefit from not being PAYE in a similar way. 

72andcounting

Life should be simple and a simple 20% of my gross would be ideal, which wouldn't be a spit away from what I would owe, but unfortunately the HMRC don't work that way. I'll just need to work out my own tax again just like I did for 20years in self employment. I was pushed out of self employment because of IR35 and 90% of my work came from them. They said I couldn't continue as self employed as they had to ensure I paid the correct tax. what a country.

Marcon

LinLui said:

Marcon said:

72andcounting said:

I'm awaiting a reply from HMRC. I have funds available to pay this tax bill, but seems I need to create a direct debit with the HMRC while I'm still working on a ZHC. If I don't work it's clear & simple. PAYE should just be that. Typical HMRC

I think the problem may be the fact you work 'as and when'. Presumably you wouldn't be too thrilled if HMRC issued a tax code to your employer which required them to deduct far too much tax, based on a month when you'd done quite a lot of work?

I suspect you are correct. I retire later this year and have an offer of similar "as and when". I have a choice of PAYE or not,  and I was advised not  PAYE by someone who knows a lot more about it than me. I was told that provided I ensure I always have the money to pay the bill,  being freelance would be simpler and I'd have access to some tax savings that wouldn't be available via PAYE. But I suppose it depends on whether the OP could benefit from not being PAYE in a similar way. 

It also depends - rather heavily! - on whether HMRC would see someone as a self employed freelancer: https://www.gov.uk/guidance/check-employment-status-for-tax

Bookworm105

72andcounting said:

 They said I couldn't continue as self employed as they had to ensure I paid the correct tax. what a country.

you mean a country which finally woke up to the fact "lots" of people were getting tax breaks for claiming to be self  employed when the work they were doing was the same as someone on PAYE without tax breaks.

When the liability was placed on the employer, rather than the (chancer) "freelancer", the employer realised it could no longer ignore its own workforce practices.

Bookworm105

72andcounting said:

I'm claiming my pension, plus engaged on a Zero Hour working as and when needed. The company have only taken £217.60 in tax on wages of £13,667.94 gross. I have commented on a few occasions to my employer but says it's between me and the HMRC. Now the HMRC have come back and said I owe them £2,654.52 in back tax. Surely if I'm on PAYE it is between my employer and the HMRC to ensure I pay the correct tax. My tax is coming off correctly for my Personal Pension. £2,550.58 on a pension of £15,750.00

your employer must use whatever tax code HMRC tells them to use.
your issue therefore is your failure to agree with HMRC (not your employer) what your tax code should be 

your employer does not know your personal tax position. They do not know that your pension is more than the personal allowance and therefore any PAYE income would be fully taxable (but not NI'able if you are indeed aged 72).
When you started this PAYE did you inform the employer this was your "only" job?

Knowing that your pension accounts for all your allowance, you should have declared this was a "second" job so that HMRC would put you on the second job tax code. You now need to correct that position by direct contract to HMRC yourself. The employer has no responsibility over your personal position 

flaneurs_lobster

Bookworm105 said:

72andcounting said:

 They said I couldn't continue as self employed as they had to ensure I paid the correct tax. what a country.

you mean a country which finally woke up to the fact "lots" of people were getting tax breaks for claiming to be self  employed when the work they were doing was the same as someone on PAYE without tax breaks.

When the liability was placed on the employer, rather than the (chancer) "freelancer", the employer realised it could no longer ignore its own workforce practices.

As someone who benefitted to the tune of thousands from these self-employed (and single employee limited company) tax "mitigation" practices, you are absolutely correct. Surprised that it was allowed for so long, clearly it was just tax-dodging by the "employee" in cahoots with an employer keen to save on employment costs.