PAYE question - anyone in the know?

[razamakaz]

Hi all - my son has just started his first job and his first pay packet had taken from it what I thought was rather more tax than I would have expected - would he have been put on emergency tax as it is his very first payday?

In the tax code box it says BR/1 - I guess that means Basic Rate - my assumption is that they have taxed him on the WHOLE of his pay, as they have to have confirmation from the tax office (via a proper coding) that he is entitled to his personal allowance. Am I correct?

[mfkirke]

That is almost certainly the case. He might have been earning a fortune in his spare time from school.

[razamakaz]

School... LOL - he's 20, left college two years ago and has not been able to get a job until now. He's got a job in a bank in London now, so I'm so relieved!

Poor kid, not only is his tax overpaid, but he has had to repay his dad for his first month's train fares, he has to pay for the coming train fares for this coming month and has to pay his dad (who he lives with) his first housekeeping expenses - hardly anything left (personally, if I was his dad I'd let him off the first month's housekeeping until he got his tax sorted and let him pay later.

[shezz]

Hi all - my son has just started his first job and his first pay packet had taken from it what I thought was rather more tax than I would have expected - would he have been put on emergency tax as it is his very first payday?

In the tax code box it says BR/1 - I guess that means Basic Rate - my assumption is that they have taxed him on the WHOLE of his pay, as they have to have confirmation from the tax office (via a proper coding) that he is entitled to his personal allowance. Am I correct?

Hi Raz

Yes your are right

BR means basic rate and he will be taxed on the whole of his gross pay.

Wk/1 means that each week they will tax him 22% on the whole of his pay, once the firm is issued with a pay code notice they will change his coding accordingly.

All basic codes are 489L, there is no such thing as an emergency code as there used to be, where a lower code was given and you used to pay huge amounts of extra tax untill you had been giving a proper tax code.

You used to know when your tax code had changed as you would receive large rebates, now you may or maynot notice that your code has been amended depending how long you are on Wk/1

Check his tax code if it is not 489L then ask why if you don't uderstand the change in coding

Codes can change for various reason's
Age if over 65
If you have a company car
If it is a second job.

If you think that even after your son has been giving the new tax code, that too much tax is being taken out of his wages then try a free online paye calculator to check.

[razamakaz]

Thanks Mimms... he only started at the beginning of June - very first job, so I suspect the tax code will kick in soon (I hope he gets a full refund rather than it being added to the rest of the year's coding!)

[shezz]

Hi Raz

No they should not add it to the rest of the years tax, all they will do is change it from BR WK1 and then work out his wage as a cumulative figure, he would keep the same tax cold, and tax will not be taken from his free pay.

Just in case you want to check out tax figures you will find that
up to £ 0-2090 is calculated at 10%
£ 2091-32400 is calculated at 22%
anything over that is calculated at 40%

Hope this helps

[videoshopruabon]

If he has been claiming Jobseekers allowance or similar, he should have been sent a P45 to give to his new employer, which would confirm his "earnings" to date and his tax code. If he has not had this, he needs to ask his new employer for a P46 - this, when sent to the tax office, will initiate the application of his tax code to this job.

Hope the job goes well for him.

[razamakaz]

No, he didn't have jobseeker's allowance - he said he didn't want to "sponge off of the government"!!! (Just me and his dad then!)

[shezz]

Hi Raz

If he did'nt get job seekers allowance then the NI contributions will not be up to date, (jobseekes pays NI contributions whilst unemployed)he may get a letter stating how much he is behind with his contributions and may well be asked if he would like to pay them up to date, but don't worry I am sure that you don't have to pay them.

[razamakaz]

I think you only pay contributions if you are earning - after all, what about women that get married and don't work - they don't pay contributions do they.

[shezz]

No you are right Raz.

I am not sure wot happens in that case, I know that years ago married woman were also allowed to pay reduces NI, but for those poor woman they have not paid enough contributions for a pension.

Check link below.

http://news.bbc.co.uk/2/low/programmes/moneybox/research/1981697.stm

LOL how have we gone on to pensions.

About the tax which started this thread, think you son will be fine, most PAYE is done by a PAYE programs such as sage or Iris these days, it used to be done manualy where mistakes could and were made.