I am back again with a question. Whats the best tax code to put if we want to re employ someone again? As we are a small business, we dont pay holidays to all the employees (what ever accrued/left). Sometimes, the employees come back and ask for their holidays to be paid. Now the issue, we could start the person off, by using his p45 part 1 which we retain. So if somebody was on747l/br or anyother tax code, is it okay to do the following?
When re-employing someone act as if you'd never seen them before. The fact that you might be able to guess their tax code from your previous knowledge of their employment with you is irrelevant. You can't be legally certain that they didn't work for someone else between employments with you.
So either use their P45(3) that you gave them (if they can produce it) or get them to fill in a P46.
Don't forget you'll need to produce 2 separate P14s for that person at year end. One for each employment.
-- Edited by Tom McClelland on Sunday 11th of September 2011 07:21:31 PM
Isn't that an employment law issue, you can't choose not to pay holiday entitlement - it is their legal entitlement!
You don't have to re-employ them to pay them that (which indeed you must pay them). You just make a payment to leaver and write a letter to the tax office notifying them of the additional pay and tax deducted after P45 was issued.
I misunderstood the original question. I thought that the employee was coming back to work for the OP.
It would be a better practice for the OP to always make sure they pay holiday pay to leavers in full, in their final normal payment. By law they don't have to ask for their holiday pay; it is the employers duty to keep track of their entitlement and pay it to their workers, giving them the time off if they're still employed, whether they ask for it or not.
Here is some HMRC guidance about payments after P45 has been issued, including holiday pay:
Thanks for all the replies. So it means i should use 0T taxcode in case if we decide to pay any extra payments like holidays or other bonuses. How to process a person. i mean, is it okay to submit the the starter details with the help of a p45 part 1. So if the person has got a tax code at leaving as 747l m1, is it okay to submit his starter information to the HMRC in the same format. Then how do i change the tax code to 0T? i use sage payroll. Dont we have to let HMRC know about this tax code change to 0T? i am a bit confused here.
Thanks for all the replies. So it means i should use 0T taxcode in case if we decide to pay any extra payments like holidays or other bonuses. How to process a person. i mean, is it okay to submit the the starter details with the help of a p45 part 1. So if the person has got a tax code at leaving as 747l m1, is it okay to submit his starter information to the HMRC in the same format. Then how do i change the tax code to 0T? i use sage payroll. Dont we have to let HMRC know about this tax code change to 0T? i am a bit confused here.
Thanks once again for all the help
Regards,
Gustavo
As I've already said, you don't restart the person so there is no starter information to submit to HMRC. You need to make a payment to leaver against the person's old record under 0T/W1 tax code. How you do that in Sage, I have no idea.
Tom, I was referring more to the OP comment of 'we don't pay holiday to all employees'
Yes indeed, and I'm in total agreement with you that it isn't legal to choose to not pay holiday pay. I'd misread the original question in my first response and I didn't pick up on the holiday pay thing at all to start with. My second response did get a bit confused with responding to you and responding to the OP.
