Help! Simple question if you know the answer

by **needtaxhelp** on Wed Nov 30, 2011 6:35 pm

I'd be very grateful for help with this.

I haven't worked since November 2008. I claimed benefits for about 6 months during 2009 but stopped claiming in August 2009. Since then I've had no income and have lived off savings.

Last week I started a new job. I had the P45 that the Benefits Agency sent me in August 2009, and that showed my tax code as a number ending in 'L' i.e. (if I understand it correctly) it confirmed that I'm entitled to the basic personal allowance. I handed parts 2 and 3 in.

Today I went in to work and was paid for my work from 25th to 30th November. The pay was in cash because the (new) firm's accountant is unwell and so the owners worked it out. They should have it all set up to pay into my bank account by next month (pay is monthly).

I'd done 25 hours at minimum wage, and therefore my gross pay should (I think) have been about £150. I was given £117.80, with no wage slip to show how it was calculated.

I'll take it up with them tomorrow but I need to know where I stand first. What I'm wondering is whether they should have applied the current basic personal allowance tax code, or whether they should have applied the Basic Rate tax code. As far as I can see from looking at a calculator online, if I'd been given the basic personal allowance tax code on £150 then I should have received £147.43. I can't see how they got to £117.80 with the BR code, but the numbers are similar and so I suspect that's what they've applied.

If they've done right then that's fine: I assume they'll get a new tax code for me from the Inland Revenue before the end of December and that I should get a rebate. But if they shouldn't have applied the BR then I'd really like to know, as I need the money now if I'm entitled to it.

Many thanks to anybody who can help me.

by **mullet** on Wed Nov 30, 2011 6:41 pm

How about National Insurance Contributions? There is no point worrying about it until you have seen the payslip. With the firm's accountant unwell (particularly if it is a small firm) it is perfectly reasonable that you may have to wait a few days for the payslip.

by **needtaxhelp** on Wed Nov 30, 2011 6:48 pm

Hi, and thanks.

I don't mind waiting a few days for the payslip (though TBH I don't know why they couldn't have written the calculation down for me--they've clearly applied one), but I'm wondering whether I should have been taxed at Basic Rate on the whole of the £150 I've earned or whether my employer should instead have applied the Emergency Code, which I think would give me the benefit of the basic personal allowance.

NI? The online calculator I looked at suggested that on £150 the NI should have been £1.32, and the tax £1.25. That's a total of £2.57 in deductions, but I've had £32.20 deducted instead.

This is a new business of a type my employers haven't run before. I just don't want to find that I've lost money because they're not sure what they're doing. That's why I'd like to establish the real position before I speak to them tomorrow.

by **needtaxhelp** on Wed Nov 30, 2011 6:51 pm

I've checked my old P45 and the code was 647L in August 2009. Entering that into the calculator still suggests that they've deducted too much, unless for some reason they were supposed to apply Basic Rate across the board.

by **mullet** on Wed Nov 30, 2011 7:00 pm

25 hours @ £6.08 = £152
Assume BR tax = £30.40
Employee NI £1.56
Net pay should be £120.04

Difference between £120.04 and £117.80 is £2.24.
The employer's contribution on £152 is £2.21.

So it looks like they have deducted BR tax and (incorrectly) both lots of NICs. It happens sometimes. Tax will be corrected next payday when a cumulative tax code is applied, and the employer's NI can simply be refunded either through or outside the payroll.

by **needtaxhelp** on Wed Nov 30, 2011 7:09 pm

Many thanks, Mullet. You're a star.

Can I assume from what you've said that they were correct to apply BR tax? I'm happy as long as they've not done that wrong, but if they have then I'd like to politely point it out to them tomorrow. I've searched for the answer online but couldn't find it. However, the HMRC page did seem to suggest that they should have applied the Emergency tax code instead of BR tax. If you could clarify this I'd be enormously grateful.

Will the NI thing automatically be corrected, or should I point that out?

I know the sums aren't enormous but I've worked hard for the money and I just want to be sure that it's correct.

by **mullet** on Wed Nov 30, 2011 7:35 pm

If you handed in a P45 (which you did) then they should have used the code shown on that form - not BR, and not the emergency code. It will be corrected next payday, but you would be justified in asking for an advance if they have made an error and it has caused you hardship. You will need to point out the NI error, if indeed that is what has happened. But wait for your payslip so that you can be sure. It will be pretty obvious.

by **needtaxhelp** on Wed Nov 30, 2011 9:25 pm

Thanks, Mullet. Much appreciated.

by **pjclar02** on Wed Nov 30, 2011 11:00 pm

Hello there

Just to add a couple of thoughts on to Mullet's commentary.

I think because your P45 is from the 2009/10 tax year, and your start date with the new employer is November 2011 then your new employer should have deducted "emergency tax" (code 747L on a week 1, month 1 basis), rather than the code displayed on the P45. This doesn't really help the calculation as the numbers still do not work out to the net wage you received, however, it should help you understand whether the employer has used the correct code when you do get your payslip through.

Second thought was that Mullet assumed that you were 21 and the minimum wage was £6.08. If you are younger the rate could be £4.98 per hour.

Will be interesting to hear what the payslip says - as there is so much scope for error!

Hope this is of some help

by **needtaxhelp** on Thu Dec 01, 2011 3:06 pm

Hello there,

That's very helpful, thank you.

Yes, I'm well over 21 so Mullet's assumption was correct.

My quick look at the HRMC site suggested to me that what you've put is the correct position, so that's what I'll say when I go into work later today. I think it's possible that the people who did it really didn't know what they were doing, and so just applied BR. It'll be interesting to see whether the same has happened to others.

When I do get a payslip I'll definitely come back and let you know what it says.

Thanks again for your help. I appreciate it.