I am doing a payroll for a client, an emloyee has worked for the business for many years, but didn't work any hours in week1 of this tax year.
In week 2 she worked 26.75 hours @ £6.08 per hour £162.64 gross pay). Her tax code is 810L. The system has not deducted any PAYE Tax in week 2 only Employee and Employer NI.
If you haven't been told to operate on a week 1/month 1 basis by HM Revenue & Customs (and you're not in any of the situations described in this list on the HM Revenue & Customs website), you wouldn't need to do so just because the employee didn't have any wages in week 1.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
As a week1/month 1 basis is not being used, you have to look at her cumulative tax position. If you imagine that her personal allowance of £8,105 has been spread evenly over the tax year, the fact that she didn't have any wages in week 1 means that she had two weeks worth of her personal allowance available to use in week 2. This is more than her actual wages in week 2, hence she paid no PAYE in that week.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
I think this has occured because tax is calculated on the cumulative pay to date therefor the employee can earn upto £312.24 in week 2 before any tax is due. The NI is calculated on actual pay and would come out at a small amount (£1.98 on code A).
Had this been week 1 she would have had to pay tax on the amount over her tax free amount, which would have been £6 x 20% = £1.20
Eventually the cumulative income will catch up to a point where tax will be payable
