Week 1 / Month 1 on P45

[VectraMan]

Can anyone explain this to me:

I'm setting up PAYE for MyCo using an online system having previously been an employee this year. When I enter my P45 details it has an option for "week 1 month 1" and total pay/tax to date. My P45 has that option checked and has nothing under "total pay to date", but instead has the values under "total pay in this employment". If I try to put the actual pay/tax into the online form it tells me I have to enter zero if week 1 / month 1 is set.

But doing that means my income this year isn't taken into account and if I start a pay run it calculates my income tax as zero, which obviously isn't right. As I understand it week 1/month 1 means as if you're starting afresh, but I haven't set that option for the current employment, just for the previous employment because it's on my P45.

What am I missing? Is the software wrong, or did my previous employer do the P45 wrong? Unchecking the option and putting in the values does appear to do the right thing, but I worry that when it's submitted it won't match up with HMRC's records and it'll be a can of worms.

[Kenny@MyAccountantFriend]

All it means is that your personal allowance is split evenly between the 12 months regardless of previous income and is why you cannot enter the previous income on the system when trying to run your payroll.

When you complete a tax return at the end of the tax year any under or overpaid tax would be picked up.

You should use tick the box as per the P45 you have received for your payroll.

[VectraMan]

Thanks. I know that SA will sort it out, but it seems wrong that I'm paying no income tax mid way through the year, which surely is the point of a P45.

Does this mean I'm personally on week1/month1 for some unusual reason, and that I need to check the box for my current employment too? I.e. it refers to me for this tax year and not the previous employment?

Edit: Okay I get it now. Move along please.

[LisaContractorUmbrella]

I may have missed something here but, unless your income for the period is very low i.e. lower than the tax free allowance for the period, you shouldn't be paying zero tax

[VectraMan]

I may have missed something here but, unless your income for the period is very low i.e. lower than the tax free allowance for the period, you shouldn't be paying zero tax

I hadn't set the week1/month1 option for the current employment so it was using the tax free allowance for the whole year, hence zero tax.

[LisaContractorUmbrella]

I hadn't set the week1/month1 option for the current employment so it was using the tax free allowance for the whole year, hence zero tax.

Oh OK that makes sense - easy done