Tax question

[Alan Medic]

If there's an expert out there I'd appreciate your opinion. The sprogg has started working recently and subsequently received a letter telling him which tax code he is on. He is being charged at a rate of 20% I believe. As his earnings between when he started and the end of the financial year are likely to be less than his personal allowance, should they be charging him at all or does he reclaim it at the end of the tax year?

Thanks.

[Tigres Pride]

I would imagine he has been put on an emergency Tax code (with an X on the end). Usually 1 of 3 things will happen.

1) they will adjust his code before end of Tax year so he will receive a refund in his pay 2) they will send him an adjusted Tax code for next year taking into account the Tax he has overpaid 3) no tax code adjustment sent for this or next year so he will have to send in a claim to his Tax Office to reclaim overpaid Tax (his work will be able to provide the Tax office name and address and reference no.) At the start of a new Tax year, his work will automatically drop the X from his Tax code unless they have received a new code for him from the Tax office.

[LondonMix]

That's all correct. He can ask for a change in tax code to reflect he will be below the threshold. However, if he should be paying nothing, that will only reduce the size of the refund rather than eliminating a need to file. Filing for a refund isn't too hard and truthfully the sprogg might appreciate the forced savings when he gets the check at the end.

[Alan Medic]

Thanks. Just looked at the letter from them. His tax code is BR. What does that mean? (he's currently employed by an agency doing temp work).

[DaveR]

BR = Basic Rate i.e. they haven't assigned him a tax code based on his actual pojected earnings and are just deducting basic rate on everything.

http://www.hmrc.gov.uk/incometax/codes-basics.htm

It's what they tend to do when they don't have enough info to work out a proper code, which will often be the case with temping.

[Bluerevolution]

he'll get it all back if on PAYE, some agencies work through an offseas pay method, they charge 4% of net but get you ?5 per day food subsidy (cheaper to but rolls/meat from a supermarket and make your own) and 20% of travel costs. I worked out better of on PAYE so be aware of this

[Mick Mac]

BR....Blue Revolution

[muffins78]

I'd suggest that he rings the HMRC and ask to receive a tax code. Assuming this is his only employment since 6th April, he can be put on a cumulative basis. When this is applied to his payroll, assuming his earnings are below the threshold, he won't pay any tax between now and the end of the tax year.

If the HMRC put him on a month 1 basis or leave him on BR, he will need to complete a return. With RTI, the HMRC should pick up that his tax code needs to be amended, but I'd still advise ringing them.

In the mean time, just to super organised for now/future, he can look to register on the Government Gateway, so he can do a tax return if needed. I'd suggest doing it now, because the HMRC will need to generate an Unique Tax Reference number for him, if he doesn't hold one already.

When he rings the HMRC, they might ask him for his NI number and his employers tax reference number. I hope this helps.

[muffins78]

Did he complete a P46? This would help solve this also.