Salaries - holding back money from PAYE
Discussion
Ok, this aint me but a friend and I would like to know what the legal situation is.
He has had some shares given to him throught his employer and due to having them incorrectly setup there is tax owing (not IR Approved is the term). This tax is supposed to be taken in PAYE, but hasnt.
Anyway, he is being told that the company will simply just remove the money from his salary - effectively he will earn nothing for three months. First month he will bring home £1000 and then the next three nothing, nada, nil....
So, can they do this? Ok, so he owes the tax, but can the company just say they can do anything and just not pay him?
What about regular commitments such as mortgage etc? Isnt there something that prevents this?
Trying to live for three months nothing will be tough - suggestions?
He has had some shares given to him throught his employer and due to having them incorrectly setup there is tax owing (not IR Approved is the term). This tax is supposed to be taken in PAYE, but hasnt.
Anyway, he is being told that the company will simply just remove the money from his salary - effectively he will earn nothing for three months. First month he will bring home £1000 and then the next three nothing, nada, nil....
So, can they do this? Ok, so he owes the tax, but can the company just say they can do anything and just not pay him?
What about regular commitments such as mortgage etc? Isnt there something that prevents this?
Trying to live for three months nothing will be tough - suggestions?
His employer are OBLIGED under tax law to deduct the correct tax from his salary. If they have made a mistake in the past, they must correct this mistake. However, they must go about corrrecting the mistake in the right way. They should have notified the Inland Revenue that they had not deducted the correct tax from this employee. The Inland Revenue should then have altered the employees tax allowances (i.e the PAYE Notice of Coding) by a sufficient amount to allow them to start collecting the arrears of tax in a staged manner, usually over the course of the tax year.
Has his coding notice been amended to collect this arrears of tax or are the employers just taking a flyer and trying to rectify the situation in an ad hoc manner.
They could be in the wrong on this.
Has his coding notice been amended to collect this arrears of tax or are the employers just taking a flyer and trying to rectify the situation in an ad hoc manner.
They could be in the wrong on this.
Technically speaking they were options and he did sell them - so yes he has the money for that. So I guess that he could get the money instead.... but its the principle of just saying that "we will just take all of your salary" thats in question....
The company, as all pointed out, should have done this correctly via the Tax Code and then spread the deductions over the tax year and taken the money via PAYE. They cocked up and rather than just spread the payment, they just want to take it in full.... seems mean to me.
Surely there should be some negotiation and agree a timeframe for payment? Or should he just pucker up and take it like a man?
The company, as all pointed out, should have done this correctly via the Tax Code and then spread the deductions over the tax year and taken the money via PAYE. They cocked up and rather than just spread the payment, they just want to take it in full.... seems mean to me.
Surely there should be some negotiation and agree a timeframe for payment? Or should he just pucker up and take it like a man?
pbrettle said:
Surely there should be some negotiation and agree a timeframe for payment? Or should he just pucker up and take it like a man?
I am sure he could, but why,, if he has just taken a huge lump sum, wouldnt now be the best time to see if off, as opposed to dropping a chunk of wages once the pot might have dwindled?
Options are fun... tax isnt. but we all have to pay ;|
JamieBeeston said:
I am sure he could, but why,, if he has just taken a huge lump sum, wouldnt now be the best time to see if off, as opposed to dropping a chunk of wages once the pot might have dwindled?
Options are fun... tax isnt. but we all have to pay ;|
I know - in the end he has to pay, but its just a pain in the short term. Just seems wrong really. And yeah, its a pretty large lump too (as you probably guessed) - so in reality he doesnt have too much of a leg to stand on.
Oh, if it were only me with these difficult decisions....once got awarded £500 worth of shares from a company that listed on the FTSE! The company even then paid the tax for me too - sooooo generous...
Must try and work for a company that gives out shares, options, bonuses etc one day. I might actually get something!
Its nice to see a comapny with options worth exercising !!
I had £.25million in options back in 2000... but like everyone else, they went the way of the DODO once Lastminute.com spoiled the party :|
last i checked they were worth -60k
still, I got out of there fast
and made a nice chunk out of them later with a few punts on the market
IPO .. would love one atm
would sort me for life
I had £.25million in options back in 2000... but like everyone else, they went the way of the DODO once Lastminute.com spoiled the party :|
last i checked they were worth -60k
still, I got out of there fast
and made a nice chunk out of them later with a few punts on the market IPO .. would love one atm
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