I help out with the books for a cleaning company and they are taking on a new and their first employee who is a student aged 19 and works part time at Next. The company is taking her on a casual/part time basis and I have a tax code of 805L for her. I will be paying her for the first time at the end of December and do not want to over tax her so is this the correct tax code to use? I am using SageOne Payroll.
As you may know you must use the code issued by HMRC. Providing the 805L Notice is to this cleaning client and for this tax year then you can check if HMRC have made a decent stab at it.
8050 would nearly always suggest they have allocated £1390 tax free allowances to the Next employment. In the normal course of events, dividing by twelve, she could earn £671 per month with your client and £116 at Next before paying tax at 20% on earnings up to 32K.
You haven't mentioned a P45 but if there is one then sometimes there will be an adjustment in the first month as a result of the earnings to date figures. lf there isn't one, then file form P46 to enable HMRC to issue a new P6 code notice.
Hope that is of some help.
Edit: spelling
-- Edited by Don Tax on Friday 20th of December 2013 12:01:23 PM
The way I thought things were done now (under RTI) is when you take on a new employee there is no P46 to file anymore. There is a "Starter Checklist" and this is used with their first pay. HMRC are then informed via the FPS. The tax code is derived from whether box A, B or C has been ticked.
Alternatively, the details from a P45 are used and the tax code from this is used.
I appreciate for all intents and purposes the "Starter Checklist" is just the "P46" under a different name. The point I am trying to get to is HMRC won't (nowadays) know a new employee has been taken on until the FPS has been submitted. So how has this 805L code been issued?
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Never buy black socks from a normal shop. They shaft you every time.
Thanks for the advice. I have used the 805 L code as she is on this code at Next. I will put her on week1/month1 as advised by the HMRC employer helpline.
You CANNOT use that code. That is the code she is on at "Next" - it doesn't mean it is the same code for every employment. If this was the case very few people (with multiple jobs) would pay tax.
I think Tim was hinting at this in his post (second paragraph).
There must have been some wires crossed as I cannot figure out why the Helpline would give out that advice unless there was some confusion.
She will need to fill in a Starter Checklist stating she has another employment. She will then be on BR tax code.
Unfortunately I am heading off and I won't have internet connection until after 11pm - I won't even get a 3G signal on my phone. But I'm sure others will explain why this code CAN'T be used.
-- Edited by Peasie on Friday 20th of December 2013 04:43:35 PM
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Never buy black socks from a normal shop. They shaft you every time.
As pointed out on a different thread, there is quite a bit of free CPD available online. The 805L code might have resulted in her being slapped with £xxx tax bill a year or two from now.
I picked up on your initial phrase "do not want to over-tax her" because, sadly, this is all too often the case - resulting in a valued employee seeking pastures new. The usual, initial, BR code on second employments can cause indignation IF there are spare allowances.
It may help you to give us a forecast of what she may earn at each job. We may be able to advise on the correct tax code which ought to be issued once HMRC are on the case.
With RTI in place once you have paid her using a BR code they will soon send you out a coding notice to say what she should be on with the new employment.
If the employee thinks by being on BR she is being over taxed and she has another employment, she can call HMRC and ask for her tax code to be split, of course it all rather depends on what she is earning at each employment and which employment she considers as her main employment.
Thanks Rob. All on the Forum have been very helpful. I will put her on week1/month1 basic rate for this month. I have informed the employee of this decision and she will contact HMRC to discuss with them.
