Was On PAYE - Now Contracting - Can I reclaim paye tax?

[ASB]

Clearly I have not worked the full year so I have paid too much PAYE.

[tongue in cheek]

Do you not for one second consider that the payroll department of whoever you were working for has actually done what is right?

The likelyhood is that based on the information you have provided them with (a tax code and P45) presumably they have got it right.

However, tax is of course cumulative, so it's not wrong yet - but will be next month, provided you have no other income of course. In any event rather than waiting for the year end in april you could ask for a refund now (but the won't normally get it unless you are earning nothing).

[malvolio]

?? Since when is £4k tax on £20 about right? It's 20% of free pay after tax allowance, not 20% of total pay. Dividends are not relevant to income tax for standard rate payers.

If he earned £20k a year he'd pay around £3k tax. He said - I think - he'd got £20k for part of the year, meaning his annual was between 1/11th and 10/11ths more. In which case £4k is well within the boundaries.

Dividends start to matter over £43k gross income and he's already had £20k...

[lxt04]

Presumably the 4K includes National Insurance on top of income tax...

[xoggoth]

?? Since when is £4k tax on £20 about right? It's 20% of free pay after tax allowance, not 20% of total pay. Dividends are not relevant to income tax for standard rate payers.

[malvolio]

Why is there no cluebat smilie? Very useful here....

I've no idea...

[stek]

'Swot I said, wasn't it? Cleary the OP doesn't understand pro rata.

Heigh ho...

Why is there no cluebat smilie? Very useful here....

[malvolio]

'Swot I said, wasn't it? Cleary the OP doesn't understand pro rata.

Heigh ho...

[MarillionFan]

Thanks - I did ask accountant but have not heard back :-(

I think I am owed a tax refund becuase my employer pro rated my salary on the basis that I was going to work a full year - Clearly I have not worked the full year so I have paid too much PAYE.

My question ultimately boils down to whether taking a divi would result in not receiving a refund. I hope its obvious that if I do not take a divi then I definitely am due a refund (as they taxed me on the basis that my full year salary would be 50K) when in fact it was 20K

Plenty of tax calculators around. Use on of these.

To be honest though 4k on 20k sounds about right.

[stek]

Surely 4k deds on 20k salary is about right, part of year or not, PAYE/NI deds are self adjusting.

[joey122]

You pay tax on earned income for the year. If you pay too much, you get a refund. If you pay too little, either you get a bill or they deem you to be a cheat and charge you retrospectively for around £100k... or something.

But why do you think £4k is too much, if you earned £20k for part of the year? Your employer would have prorata-ed it over the year (i.e. take the annual salary, work out the total tax due, divide by 12, charge that each month)

What does your accountant think? (yes I know, haven't asked him, haven't got one, whatever...)

Thanks - I did ask accountant but have not heard back :-(

I think I am owed a tax refund becuase my employer pro rated my salary on the basis that I was going to work a full year - Clearly I have not worked the full year so I have paid too much PAYE.

My question ultimately boils down to whether taking a divi would result in not receiving a refund. I hope its obvious that if I do not take a divi then I definitely am due a refund (as they taxed me on the basis that my full year salary would be 50K) when in fact it was 20K

[MarillionFan]

You pay tax on earned income for the year. If you pay too much, you get a refund. If you pay too little, either you get a bill or they deem you to be a cheat and charge you retrospectively for around £100k... or something.

But why do you think £4k is too much, if you earned £20k for part of the year? Your employer would have prorata-ed it over the year (i.e. take the annual salary, work out the total tax due, divide by 12, charge that each month)

What does your accountant think? (yes I know, haven't asked him, haven't got one, whatever...)

WHS. You'll have to wait until after April and then put your Self Assessment in.

Im owed £5k back, £4k in pension conts and then 5k from offset. I cannot wait for this tax year to end!!!!

[malvolio]

You pay tax on earned income for the year. If you pay too much, you get a refund. If you pay too little, either you get a bill or they deem you to be a cheat and charge you retrospectively for around £100k... or something.

But why do you think £4k is too much, if you earned £20k for part of the year? Your employer would have prorata-ed it over the year (i.e. take the annual salary, work out the total tax due, divide by 12, charge that each month)

What does your accountant think? (yes I know, haven't asked him, haven't got one, whatever...)

[joey122]

Someone must know this - I was a perm until Aug last year - I earnt 20K as a PAYE and paid 4K in tax (which is obviously too much) as the HMRC assumed I would be working the full year.

If I do nothing then I *should* be eligible for a tax refund - If I take a dividend out to my full salary entitlement will I still be able to get a tax refund for the PAYE salary?