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Title: One for the accountants/payroll experts Post by: Samdy Gray on Tuesday, April 9, 2013, 19:02:22 If you have just one months pay in a tax year (i.e. April 2013 pay) due to leaving employment, would this be taxed on a grossed up yearly amount (and potentially be taxed)? Or as it is less than the personal allowance, would it be paid without any tax deducted?
Title: Re: One for the accountants/payroll experts Post by: janaage on Tuesday, April 9, 2013, 19:04:56 If it's anything like our place your monthly salary is assumed to be at that rate for the year. We used to get our bonuses in April pay day and got taxed heavily on it. However payroll would then flatten the tax out over next couple of months.
Title: Re: One for the accountants/payroll experts Post by: Peter Gibbons on Tuesday, April 9, 2013, 19:09:34 If it's anything like our place your monthly salary is assumed to be at that rate for the year. We used to get our bonuses in April pay day and got taxed heavily on it. However payroll would then flatten the tax out over next couple of months. I think that's right, and if you dont have any more pay against which to flatten it out, you have to file a P-something or other (P60?) Title: Re: One for the accountants/payroll experts Post by: Simon Pieman on Tuesday, April 9, 2013, 19:26:02 It will be grossed up because it is a monthly payroll. In effect, it's actually your annual personal allowance which is divided up by 12 months.
Title: Re: One for the accountants/payroll experts Post by: Simon Pieman on Tuesday, April 9, 2013, 19:27:08 And you'd get a refund when you next get work through the PAYE system, or at the year end as a rebate from the tax man if not.
Title: Re: One for the accountants/payroll experts Post by: janaage on Tuesday, April 9, 2013, 19:28:41 Si if you let your employer know that it'll be your only pay of the tax year, perhaps you're moving abroad, am I right in thinking they can then manually intervene and pay it gross to you?
Actually I could be wrong there, mixing it up with non-residents taking income from uk pension schemes, they can be paid gross. Title: Re: One for the accountants/payroll experts Post by: Stef Troll on Tuesday, April 9, 2013, 19:34:55 Just change your tax code to a NT tax code. Ring up hmrc and they will change it and inform your employer.
Title: Re: One for the accountants/payroll experts Post by: Samdy Gray on Tuesday, April 9, 2013, 19:48:12 It will be grossed up because it is a monthly payroll. In effect, it's actually your annual personal allowance which is divided up by 12 months. And you'd get a refund when you next get work through the PAYE system, or at the year end as a rebate from the tax man if not. Ta, Si. Makes sense now. Title: Re: One for the accountants/payroll experts Post by: Bewster on Tuesday, April 9, 2013, 19:51:23 Your tax free earnings for 2013-14 is £9440, adjusted for any taxable benefits. This split into 12 equal installments of £787 - so you can earn £787 in a month before being taxed. Tax code 944L
If you do not work in April, but work in May this is cumulative so you can earn 2 * 787 = £1574 before being taxed. So in order to answer your question you will get taxed on anything above £787 in April. If you then leave employment at the end of April you will accumulate your tax free allowance until you return to employment. If you do not work again you can contact HMRC to get the tax back. However if you are on a Week1 or Month 1 tax code you do not get any cumulative benefit |