Only working 3 months in this tax year - how to take advantage?

[Gonzo]

I haven't worked so far in this tax year and am about to start a 3 month contract, after that I won't be working again. I know that the standard tax code allows you something like £5k tax free earnings each year, so lets assume that I only earn £5k in these 3 months, how can I get it tax free?
I know that any agency via PAYE will charge tax with the assumption that these earnings will continue for the whole year, but because I know otherwise is there anything I can do to avoid it? I'd prefer not to open my own ltd company, but would be ok using an Umbrella.

k thanks in advance

it's really more because I'm leaving the country after this contract, and I didn't want to have to bother with claiming the tax back in april, that's all..

also one followup question - is there any point in using an umbrella for these 3 months?

You should fill out a P85 form and send to it to HMRC when you leave the country.

When you fill out the form you have the opportunity to attach the P45 from your Umbrella co and claim back any overpaid tax at that point without waiting until the tax year end.

Provided that your tax affairs are not complicated and you will not have any other income in the UK after you leave then it should be straight-forward.

HMRC took two months to process Mrs Gonzo's P85 and refund her overpaid tax. That was last year.

[LisaContractorUmbrella]

it's really more because I'm leaving the country after this contract, and I didn't want to have to bother with claiming the tax back in april, that's all..

also one followup question - is there any point in using an umbrella for these 3 months?

I believe that you could apply for a refund of any tax overpaid when you leave the country provided that you were giving up tax residency, otherwise you would need to wait until April and make an application at the end of the tax year
HTH

[Brussels Slumdog]

It depends

it's really more because I'm leaving the country after this contract, and I didn't want to have to bother with claiming the tax back in april, that's all..

also one followup question - is there any point in using an umbrella for these 3 months?

How much will you take home after expenses billing via agency or via umbrella.
It maybe easier to get your tax back via the umbrella than an agency.
My UK umbrella company has in the past always made a tax correction at the
year end.
When you leave ask for a P45
The only reason to claim back tax is if you have overpaid on other income like
interest received.
The amount of tax paid via P45 should be equal to your tax due for the year.

[sleepyweasel]

Are you really so worried about such small amounts of money? I know you haven't worked and all that but its 3 months on tax of less than 5K?? Have you worked out how much this will actually be and if it really is worth worrying about?

You say continue for the whole year? You mean the 2 months of the tax year left?

it's really more because I'm leaving the country after this contract, and I didn't want to have to bother with claiming the tax back in april, that's all..

also one followup question - is there any point in using an umbrella for these 3 months?

[northernladuk]

I know that any agency via PAYE will charge tax with the assumption that these earnings will continue for the whole year, but because I know otherwise is there anything I can do to avoid it?

Are you really so worried about such small amounts of money? I know you haven't worked and all that but its 3 months on tax of less than 5K?? Have you worked out how much this will actually be and if it really is worth worrying about?

You say continue for the whole year? You mean the 2 months of the tax year left?

[Brussels Slumdog]

Adusted calculation

I haven't worked so far in this tax year and am about to start a 3 month contract, after that I won't be working again. I know that the standard tax code allows you something like £5k tax free earnings each year, so lets assume that I only earn £5k in these 3 months, how can I get it tax free?
I know that any agency via PAYE will charge tax with the assumption that these earnings will continue for the whole year, but because I know otherwise is there anything I can do to avoid it? I'd prefer not to open my own ltd company, but would be ok using an Umbrella.

k thanks in advance

3 Months will only take you to end December and the tax year ends 5th April.
The agency or the umbrella company should make the calculation based on the week you start ie week 36 until end of tax year. They should give you a refund due if you have overpaid at the end of the tax year ie you don't work
Jan-March.

[Maslins]

Like you say, you will be taxed on the assumption your earnings will continue at that rate. However, at the end of the tax year you will be able to reclaim any excess tax paid.

Either being directly PAYE or via umbrella won't enable you to be paid gross. Setting up a Limited Company would, but I fully understand why you wouldn't be keen for just 3 months work, the admin costs would eliminate any benefit.

[sleepyweasel]

I haven't worked so far in this tax year and am about to start a 3 month contract, after that I won't be working again. I know that the standard tax code allows you something like £5k tax free earnings each year, so lets assume that I only earn £5k in these 3 months, how can I get it tax free?
I know that any agency via PAYE will charge tax with the assumption that these earnings will continue for the whole year, but because I know otherwise is there anything I can do to avoid it? I'd prefer not to open my own ltd company, but would be ok using an Umbrella.

k thanks in advance