I have a client who works as a photographer for a company. They pay her for the work she does, mileage and expenses. They send her a payslip every month and a P60 at the end of the tax year.
However, she does not pay any tax on these payslips or NI and the P60 show a nil balance as well the only balance on there is a balance for total taxable pay, she also classes her self as self employed.
How do I tackle this when completing her SA?
Do I include the employers pay through the employment section, this will mean she'll only have her expenses running through her self employed section or should I just use my common sense and say she never paid tax so through that employment and just put the amount under total taxable pay from the P60 through her self employment.
Hi Vicki. As your client is receiving a P60 the company income is under PAYE and entries must be made on the Employment Supplement.
You can though, include the salary in her accounts as long as it's labelled as Employment income AND it is removed in the tax computation (and the Self Employment pages) otherwise it will be declared twice, of course.
I have seen lecturers who get NIL tax P60 and are self employed. I was pretty confused at first oo. It used to be so they could pay NIC only - but that has been scrapped now
Thank you for your replies, sorry for my delay in corresponding.
So should I put in her income as employment and then set her up as self employed too (for the self assessment) so that I can record her expenses. Although they pay her 25 pence per mile for fuel and her parking costs, she has a broadband and a telephone which she uses for her business.
Will the expenses be taken from the employment income her self employed business will be running a loss. I'm guessing it will all caculate accordingly but not sure. You'd think after all the returns I have filed, I'd know by now. It goes to show you're always learning! :)
Is there no tax to pay because she is under the taxation and NIC limit? I assumed you wouldn't be asking the question if that was case, but best to clarify?
As you know, an employee can be reimbursed for mileage and expenses, by their employer, on their wage slip, but that doesn't mean they need a tax return. Its not income, but a reimbursement for expenses paid (net effect NIL to employee. The employer then claims the expenses.
Does the employer see her as self employed? If so, what is the reason for the P60, instead of just paying her invoices?
Does she issue sales invoices?
It not really clear why there is no tax, and whether this lady is actually employed or self employed - you will need to give us some more info,hun
-- Edited by FoxAccountancyServices on Saturday 17th of May 2014 12:37:20 PM
Sorry I'm so rubbish at promptly replying, I get lost in other work then answer when I get back to this particular client.
I have a feeling that she is employed but she likes to think of her self as self employed, this is why she thinks she needs to file a self assessment. This client doesn't actually earn over her personal allowance. I feel so stupid as I have ploughed through her paperwork for quite a few hours and now probably won't get paid. My fault I should have asked the question right at the start.
Trial and error!
Thank you for helping out and making me see clearly. :)
I have asked her to contact the company she works for to find out whether the income printed on the payslips and P60 have already been reported to hmrc, she replied she found out last year and she does have to file a return, i'm not sure what to do now.
Hi, I already am, so will ring them. I just think it's bizarre how one person can think they are self employed whilst the other party are playing the employment card. You can see how problems arise, especially when the construction in industry scheme is involved.
