Calculating one-off tax/NI payment?

One also needs to know what was on the P45 she gave the employer. Which

week of the year it was, and any tax and pay from that employer paid previously in the same employment. If she's on P46 procedures she will probably be on a week 1 tax code, not the cumulative one you quote. Also

one needs to know how many weeks were covered.

The £6,470 is spread equally through the year. The details may not be

quite right, but it is approximately 6470 * week number / 52. This is subtracted from the gross pay to date and the amount multiplied by the basic rate. The tax paid so far is taken off and that is the amount of tax paid in the week. I think the NI thresholds and rates are done as the week's fraction of the annual figures, assuming a weekly wage.

You should be able to get to the gory details by looking for something like "taking on a new employee" on HMRC's site, then following through from there. The actually proportioning of the tax free allowance uses a

pre-computed table, if you are doing it manually.

I would just add that we really need also to know if she is paid weekly or fortnightly; and if weekly then how the hours divided between the 2 weeks. This can affect tax if the code is being applied on the non-cumulative basis; and NICs if her earnings one week were above the primary threshold and the other week were not.

It might all be a bit clearer if we knew what was on the last payslip she has: eg what if anything does it show for pay and tax to date as well as pay and tax for that week/fortnight?

Weekly paid, but because of New Year she's submitted two timesheets.

Her last payslip (representing a week) gross year to date 1287.00 tax year to date 157.20 gross pay 337.50 (37.5 hrs x £9) tax 42.40 NI 25.02

That's OK; and let's assume the tax and NICs have been computed for each week separately as they ought.

I make those figures right within a penny or two which I put down to the rounding in the tables[1] for a PAYE code being operated on the non-cumulative basis and NICs not contracted out (and not a married woman's rate).

I forgot to say that we also need to know how the 84 hours worked divided between the 2 weeks as the payer ought to calculate the tax and NICs for each week separately if she is paid weekly. But from a quick look at them I had expected her to have around more deductions and around 37 less than 632.40 paid into her account .

But this ain't my business anymore so I could well have gone wrong somewhere.

[1]I can't be a***d to download the tables so have used the calculation method as best I recall it ;)

Thanks for your input.

So you reckon £595 net on gross of £756?

That seems a high deduction level?

37.5 hrs @ minimum wage gets you £190.44 a week?

I think the hours worked were 41 and 43 = 84.

Tax is 20% and NI is 11% so ball park take home is going to be between

75% and 80% gross once you have factored in the tax free allowance.

I just put the gross figure into an online calculator and £595.65 net popped out.

Spot on.

Yep.

I suggest minimum wage is a red herring when she is getting 9 per hour.

But another way of looking at it is that the previous week she worked

37.5 hours when her deductions were tax 42.40 plus NICs 25.02 67.42

The following 2 weeks she earns *more* but you say she suffered

*smaller* deductions of 84 x 9 = 756 minus amount paid 632.40 123.6

That's less than twice the deductions for the week when she worked less. So yes, I was expecting *bigger* deductions.

That's helpful - but doesn't explain the discrepancy. She should have paid at least as much tax and NIC for each week as she did for the preceding week when she worked 37.5 hours. Unless of course the PAYE code has changed in the meantime, or summat else is afoot.

Could that "summat else" be that she was actually paid for *three* (3) weeks? Spreading the hours 84 hours evenly over three weeks I get a total of 123.40 deductions - near enough to the 123.60 you report.

In any event, I'd advise waiting for the payslips as it certainly doesn't look to me that she's being ripped off.

Bloody hell, I think you've nailed it!

My sister now tells me the a time sheet she submitted (for 17 hours, Xmas week) wasn't paid because she missed the cutoff point.

So, this £632.40 payment actually represents three weeks, 17hrs,

24hrs, 43hrs.

Sorry for the misleading info - sisters, gotta love 'em!

Yep so did I.

used this

which allows you to "pretend" that you are paid bi-weekly for its calculations.

To the OP. Is your sister aware that she is being taxed on a "Week 1" basis and that the cumulated figures suggest that she has paid too much tax and will be due for a refund at year end (which she will have to apply for herself)

tim

I agree she should be on the watch for this but I would not want her to spend money on the basis of a tax refund when we don't know all the circumstances. For example, she may have earned 20,000 in another job earlier in the tax year but failed to get or hand in a P45 when starting the current employment. She probably wouldn't then be due much of a refund - and possibly none if there was no gap.

Also, HMRC may yet issue a new code to be used on the cumulative basis before the end of the tax year which would lead to her employer automatically refunding the overpayment if the employer used the P46 procedure properly.

Just spoken to her, she tells me her tax code is showing as W1647L.

She did do some self-employed work earlier in the year (which she's told HMG about and has registered for self-assessment) as well as having earned about £8k between April and August so at some point it's all going to have to come out in the wash.

Sounds like there's nothing to worry about but there will very probably be a bit more tax to pay after the end of the year on the self-employment income. HMRC may offer to collect it through her PAYE code if it's not a lot and she is still doing the agency work or is employed.

There's also then the NICs. Did she tell HMRC about her self-employment and then start paying Class 2 NICs? If not, you might want to start by looking at

and especially the link from there about Class 2 NICs

Of course you might also want to be thinking about what her tax adviser wants by way of sisterly tokens of gratitude and esteem :)

Ha ha, he'd get a smack in the mouth :-)

She hasn't paid anything out of her self-employed earnings but she's kept her parking receipts and has documented her mileage.

I assume she declares her earnings, keys in her expenses and the online calculator will tell her she needs to pay x?

"Rasta Pickles" wrote

Is she under the threshold for paying the (2.40 per week, paid monthly) Class 2 NICs?

"Rasta Pickles" wrote

You pay Class 2 NICs *during* the tax-year, not *after* the year-end!

Good. But she'd do well to keep also any P45s and of course in due course any P60. I'd also advise keeping payslips as well as employers don't always provide P45s/P60s when they should.

I suggest she should register with HMRC for online filing as soon as possible after the end of the tax year and do it online. It's a wee bit more than banging a few figures into an "online calculator" but all eminently do-able if you start early, take it slow, and look for help if unclear.

Tim raises v good points. (I did ask about Class 2 NICs in an earlier post. If she hasn't told the NICO of HMRC she is self-employed she should do so - although they have now relaxed the old rule which required notice within 3 months . She can do that online or over the (0845) phone or on paper - see