Hope everyone had a good bank holiday weekend, despite the weather!
I do the payroll for one of my clients (about 10 employees) on a monthly basis. One of the employees left on 31st July and I paid her for the final time and submitted her P45 online. A couple of weeks ago my client told me that she should have been paid holiday pay (client's fault, not mine!) The accountant told me I would have to put her in as a new starter, enter the previous pay information and then create a new payment and then re-submit the P45. I did the payment and used the tax code she had when she left...647L. This meant she had a tax rebate of about £80.
However, today I phoned the Employers' Helpline and asked them about re-submitting the P45 and was told I couldn't and that I'd have to write to the Tax Office and let them know what had happened and with all the details. They also told me that I should have used BR tax code on a Wk1, Mth1 basis. I put these details into Quickbooks and re-created the payment (although there is nowhere in QB that I can see to put Wk1, Mth1) and this said that she was due a refund of about £450.
Which scenario is correct? If it's the second one we shall have to pay her some more! Should I have put previous pay details in when using BR?
Bit of a payroll newbie...want to take a payroll course but am doing ICB manual and computerised at the moment!
BR stands for Basic rate and taxes every penny at 20% so no need for W1 M1 - these only apply with a "proper" tax code. So info from HMRC is wrong in that.
You should set the employee on as a new employee but not with the previous pay information ('cos she might have had a new job for which she was being paid) using BR. This should not result in any tax rebate at all as she will be taxed on the entire amount. Give her a further P45 with just this payment and she will be able to use this information, if necessary, to claim back any overpaid tax.
Many thanks for replying. I will take your advice and re-create the payment for her. I assume this will mean we have overpaid her and will have to try and get some of it back? The paid amount was only small, about £135.
I knew BR stood for Basic rate, but wasn't sure how it was applied
I didn't realise the money had already been paid - that makes it a bit awkward, I'm sure. If you can't get it back the employer will just have to take the hit!!!!
Yes BR is generally used when someone has more than one job. They take their tax allowance (6475) in their main job and then anything else is taxed at the basic rate.
Whereas a Wk1/M1 is used for an employee who has not got a P45 when they start and tick the box on the P46 that says this is their only job. It assumes that they have used part of their tax free amount as it is part way through the tax year, therefore, it takes into account the tax free allowance on a weekly/monthly basis. This can result in the employee overpaying tax but again this can be reclaimed at the end of the tax year.
Yes I've already paid her unfortunately. Probably not professional to blame the client, but it was her fault ...lol The employee insisted she was due holiday pay before she left, and as I haven't been there that long I relied on the client to tell me whether this was the case.
Thanks for the short lesson on payroll...fancy a job teaching me? lol
Yes I've already paid her unfortunately. Probably not professional to blame the client, but it was her fault ...lol The employee insisted she was due holiday pay before she left, and as I haven't been there that long I relied on the client to tell me whether this was the case.
Thanks for the short lesson on payroll...fancy a job teaching me? lol
Pauline
If you were near here.
At the moment, I've to prepare for a financial awareness course for elderly people, excel to order from an employee at one of my clients and revamp a L2 finance for small business owners which I'm delivering in a couple of weeks, I've done it before but I need to tweak it a bit as I've only got 3 hours to "do" double entry book-keeping and explain P&L and Bal Sheet - last time I had way too much stuff.
Just found this thread and would like to add my thanks too, as I have a client who has an employee who recently left and is now claiming that they were underpaid in a prior period, so this is very handy to know how to deal with it.
Should I have put previous pay details in when using BR?
