Pay periods & Tax years
Discussion
After starting a new job in March, I missed their internal pay cut off (quite early in the month) - so was given an 'advance' as expenses and then was paid as normal with backpay in April.
I assumed that my April pay would break down the pay into the two tax year periods - as I wanted the income earned in 13/14 to show in that year and not 14/15 for various reasons.
I am now told I won't get a 13/14 P60 as it only counts when you are actually paid the money (ignoring the advance which was deducted in April) - is this the case and I can't do anything with the March earnings?
I assumed that my April pay would break down the pay into the two tax year periods - as I wanted the income earned in 13/14 to show in that year and not 14/15 for various reasons.
I am now told I won't get a 13/14 P60 as it only counts when you are actually paid the money (ignoring the advance which was deducted in April) - is this the case and I can't do anything with the March earnings?
Employees sometimes do receive loans from employers - often quite substantial e.g. to pay for commuter season tickets.
For many years, a director/employee could receive a loan of up to £5,000 without incurring any sort of tax charge. This has just been increased to £10,000. No tax charge will arise as long as -
a) - the loan falls below the set threshold
b) if above the threshold, the employer charges interest at or above the HMRC set rate
Of course, the essence of a loan is that it should be repaid at some point. If an advance to an employee is not recovered from the employee, it could become liable to PAYE and NI.
It is not uncommon for directors to "borrow" from their own company rather than have the company pay them a salary or dividend. These types of balances have to be cleared within 9 months of the end of the company's annual accounting year. If not, the company will be subject to a penalty Corporation Tax charge.
There are a number of close to the edge tax avoidance schemes involving loans that somehow never get repaid. The Jimmy Carr scheme was based on this. HMRC do not like these schemes but they do seem to have problems stopping them.
For many years, a director/employee could receive a loan of up to £5,000 without incurring any sort of tax charge. This has just been increased to £10,000. No tax charge will arise as long as -
a) - the loan falls below the set threshold
b) if above the threshold, the employer charges interest at or above the HMRC set rate
Of course, the essence of a loan is that it should be repaid at some point. If an advance to an employee is not recovered from the employee, it could become liable to PAYE and NI.
It is not uncommon for directors to "borrow" from their own company rather than have the company pay them a salary or dividend. These types of balances have to be cleared within 9 months of the end of the company's annual accounting year. If not, the company will be subject to a penalty Corporation Tax charge.
There are a number of close to the edge tax avoidance schemes involving loans that somehow never get repaid. The Jimmy Carr scheme was based on this. HMRC do not like these schemes but they do seem to have problems stopping them.
I think you may have the wrong end of the stick Eric.
I read it that the OP is annoyed that no pay was processed in March, instead he has been paid his March salary in April (as well as April). That may result in more income tax and NI being deducted I guess.
I would be annoyed if it were me too.
I read it that the OP is annoyed that no pay was processed in March, instead he has been paid his March salary in April (as well as April). That may result in more income tax and NI being deducted I guess.
I would be annoyed if it were me too.
Eric Mc said:
The key factor is the date he formally started employment.
Salary would be payable with effect from that date.
EricSalary would be payable with effect from that date.
That is what the OP was suggesting!
He has lost out on having the benefit of any tax-free pay in March, though whether this actually costs him anything depends on his earnings prior to that.
David
Mattt said:
You're right, it's cost me several hundred pounds through no fault of my own.
I wondered if there was any way to right the situation?
I believe you can ask HMRC to assess the deferred March pay in the 2013-2014 tax year and that may assist the income tax, but I don't know if that works for NI as well. You will need a statement from your employer of what was accrued for 2013-14 but not paid until 2014-15.I wondered if there was any way to right the situation?
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