Situation regarding employer and tax

MrS_2

Hello all,

I apologise if this is in the wrong section, however I was unsure on where I should post this. Currently I am in a bit of a situation and need some advice on what the best course of action is to take.

First some quick details:

• I am a student studying at university
• I have not and will not earn over 5,500£ this year
• I am based in the UK

Now onto my situation. I started working for an online company doing voluntary work around a year and a half ago. I was asked by this company to manage certain community areas of their site, and as I had some experience in this and wanted to gain some more I happily agreed.

Overtime I got more and more involved and the job range changed. I began helping with support, product testing etc. Eventually the company offered to begin paying me for some of the work I was doing. Now the amount was not much, roughly £340 a month, yet for me this was ideal as I was a) gaining experience, b) doing something I enjoyed and c) being paid for it.

Payment came in the form of invoices sent monthly and the money would be directly sent into my account. I was under no contract, however I saw no issue with this as I was not earning above any tax threshold.

In the past two months my pay has increased to around £540 a month. Now the situation arises. I am still under no contract and working from home. I am still at university and while it is an ideal job I am worried about my situation with the tax man. As far as I am aware I cannot claim to be self-employed (I decide my hours but I cannot hire other staff and it is not a business). Therefore I should be paying a certain amount of national insurance and if I continue next year I believe income tax. Yet despite pushing the company for the last two months I am still under no contract or the PAYE system. This leaves me in a dilemma and I am unsure on what the best step is.

I have no doubt that the company will eventually in the next few weeks put me on the tax code. If this is not the case I would guess the only option would be to reduce my wage to below £400 (NI threshold) or leave the company. Is there another option anyone can suggest or are these my only two? The next issue is how to handle the last two months whereby I have received over and above the NI threshold. What is the best action I can take to pay this? Can I pay it? Or do I need to force the company to back date it?

Any advice would be appreciated

fengirl_2

Ok, first of all, you DO have a contract. the fact that they give you work to do, you do the work and they pay you constitutes a contract in UK law.
The next thing is to decide whether or not you are an employee or a contractor. (Self employed is the same as being in business, so you cannot say this is not a business.)
It is the employer's responsibility to operate PAYE where there is a contract of employment and if the employer is in any doubt, he should contact HMRC. Where an employer fails to operate PAYE, the employer has to repay HMRC.
I think you need to ask the company politely but firmly to contact their tax office and get a ruling on your status. Once this is decided, they will either have to pay over the tax and NIC for you, or you will know you are slef employed.
You have 3 mths to register as self employed and so, in order to protect yourslef, you may want to register now as a precaution.