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Where Taxpayers and Advisers Meet

Previous tax year payments taxed in the current tax year - please help!

coconut_sheep
Posts:1
Joined:Tue May 02, 2023 11:56 am
Previous tax year payments taxed in the current tax year - please help!

Postby coconut_sheep » Tue May 02, 2023 12:08 pm

Hey all! I hope someone can help as I'm getting nowhere both with my Payroll and with HMRC.

I started my current job on 27/02/2023 - I'm a contractor inside IR35 and the first payment I received for 2 weeks' worth of work was on 14/04/2023. When I queried the extortionate amount of tax with my payroll, I was informed of the following:

"Your agency pays your funds a number of weeks in arrears. When we moved over to the new tax year you still have payments for weeks worked in the last tax year. As we are unable to go back and process these they have to be attributed to the first week of the tax year.

(...) each week being paid is currently being added to your earnings for week 1 of the tax year. Week 2 of the tax year is week ending 9th April and so until we process a payment for week ending 9th April your payments will continue to be added to your taxable week 1 figures and the tax and NI will be deducted accordingly."

Is this right? HRMC can't do anything about it and said it's the employer that has to submit tax correction but did not give me any specific info.

I'd be extremely grateful if someone can shed some light on this.

wheatleytax
Posts:4
Joined:Fri Jun 12, 2009 1:05 pm

Re: Previous tax year payments taxed in the current tax year - please help!

Postby wheatleytax » Thu May 11, 2023 8:28 am

Earned income is taxed under the PAYE system income and is dealt with on a receipts basis.
You are taxed when you receive it not when you earned it, so no adjustments are necessary (or even possible) to amend your tax position.

darthblingbling
Posts:711
Joined:Wed Aug 02, 2017 9:09 pm

Re: Previous tax year payments taxed in the current tax year - please help!

Postby darthblingbling » Thu May 11, 2023 10:39 am

It's strictly the earlier of legal entitlement or payment (if not a director). So if the legal entitlement to the payment fell in the previous tax year the employer is incorrect.

Integraoutsourcing
Posts:11
Joined:Wed Apr 12, 2023 12:55 pm

Re: Previous tax year payments taxed in the current tax year - please help!

Postby Integraoutsourcing » Thu May 11, 2023 3:15 pm

Hey, Based on the information you provided, it sounds like your employer is correct that payments you received for work performed in the previous tax year (prior to April 6, 2023) are being added to your earnings for the first week of the current tax year. This is because your employer is unable to go back and process these payments for the previous tax year, so they must be accounted for in the current tax year.

It is important to note that HMRC is correct that it’s ultimately the employer’s responsibility to submit any necessary tax corrections, but it's also important for you to keep track of your own earnings and taxes paid to ensure everything is accurate. For more info contact Integra outsourcing services online

If you believe there is an error in the way your earnings are being taxed, you should raise this issue with your employer’s payroll department and ask them to provide more detailed information on how they are calculating your taxes. You may also want to seek advice from a tax professional or accountant to ensure you are not overpaying on your taxes.

billypiper
Posts:114
Joined:Wed Aug 06, 2008 4:10 pm

Re: Previous tax year payments taxed in the current tax year - please help!

Postby billypiper » Sun May 14, 2023 11:37 am

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