Reply to: Permie earnings at start of year - too much tax

[psychocandy]

When I started my LLP company, I transitioned from a brolly-type situation. I submitted a P50 and covering note explaining that I wasn't going to be making more employment earnings that year due to the way LLPs get taxed. I received my cheque in about 3 weeks.

Cheers Craig. Thanks for info.

[craig1]

Yeh. I did think of that. The notes do seem to indicate that its for people who have retired/ gone back to college/ unemployed more than people who've become company directors.

After all, what do I put as my current status? I'm guessing 'Do not expect to go back to work before end of tax year'. I suppose this is correct because even though I'm company director I dont intend to pay myself a salary as company employee until then.

Worth a try I suppose !!!

When I started my LLP company, I transitioned from a brolly-type situation. I submitted a P50 and covering note explaining that I wasn't going to be making more employment earnings that year due to the way LLPs get taxed. I received my cheque in about 3 weeks.

[psychocandy]

If you're not going to earn any more money in this financial tax year, or are going to be not earning for a decent wad of time without benefits, and you can prove it to a reasonable level, then use HMRC P50. HMRC usually pay out in a few weeks for straight-forward cases, if the assessor isn't sure about your story and why you should get the money back then it could take a few months as it goes through the system.

Yeh. I did think of that. The notes do seem to indicate that its for people who have retired/ gone back to college/ unemployed more than people who've become company directors.

After all, what do I put as my current status? I'm guessing 'Do not expect to go back to work before end of tax year'. I suppose this is correct because even though I'm company director I dont intend to pay myself a salary as company employee until then.

Worth a try I suppose !!!

[craig1]

If you're not going to earn any more money in this financial tax year, or are going to be not earning for a decent wad of time without benefits, and you can prove it to a reasonable level, then use HMRC P50. HMRC usually pay out in a few weeks for straight-forward cases, if the assessor isn't sure about your story and why you should get the money back then it could take a few months as it goes through the system.

[psychocandy]

Actually tax code from last employer is normal its just that JSA people seem to have given me a P45 with week1 ticked.

Any ideas how I sort this?

[psychocandy]

Accountant tells me that tax code from P45 is week 1 / month 1 so any previous tax is not taken into consideration. And I'll have to wait until self-assessment. Bummer.

[lje]

Yeh, I understand I'll pay tax because I've used up my allowance already.

Is that true for NI though? Am I right in saying this is calculated on a per week/month basis rather than total for the year? (so as long as my pay per month is below the NI threshold I wont pay any).

Like you said, same as paying dividends tax wise but I never thought of doing this...

My understanding is that each employment you have (even if concurrent) is treated separately for NI purposes. So you could have lots of jobs each earning you £7k and you wouldn't pay any NI. However, whilst I know this is true for people with concurrent jobs I am only assuming that it also carries over to people with sequential jobs - a bit of research should answer that for you.

[psychocandy]

Why not just pay yourself a salary from your company? National Insurance starts again for each job you have so you don't have to worry about that costing you anything. You can get salary in and just pay PAYE tax - which is the same as you'll end up paying on dividends anyway.

Yeh, I understand I'll pay tax because I've used up my allowance already.

Is that true for NI though? Am I right in saying this is calculated on a per week/month basis rather than total for the year? (so as long as my pay per month is below the NI threshold I wont pay any).

Like you said, same as paying dividends tax wise but I never thought of doing this...

[lje]

Sounds good. Obviously is dependent on setting yourself up with a salary from your ltd. Like someone previously said, I could pay myself 1p a month just to get things going.

I'm assuming the cheque comes into the company as the employer which then pays the refund to the employee (you) as a PAYE payment in the form of tax refund?

Why not just pay yourself a salary from your company? National Insurance starts again for each job you have so you don't have to worry about that costing you anything. You can get salary in and just pay PAYE tax - which is the same as you'll end up paying on dividends anyway.

[psychocandy]

I was in a very similar boat, having worked through an umbrella for part of the year before starting myco. I followed the advice on this page: HM Revenue & Customs: Claim funding for a tax refund for your employees and completed the form here: https://online.hmrc.gov.uk/shortform...ww.hmrc.gov.uk.

A week later I had a phone call from the AO, because I was out by a few pence in my calculation; I resubmitted and about two weeks later I received a cheque. In my next payslip I received the refund, and at my PAYE year end everything balanced. :-)

Sounds good. Obviously is dependent on setting yourself up with a salary from your ltd. Like someone previously said, I could pay myself 1p a month just to get things going.

I'm assuming the cheque comes into the company as the employer which then pays the refund to the employee (you) as a PAYE payment in the form of tax refund?

[matzie]

I was in a very similar boat, having worked through an umbrella for part of the year before starting myco. I followed the advice on this page: HM Revenue & Customs: Claim funding for a tax refund for your employees and completed the form here: https://online.hmrc.gov.uk/shortform...ww.hmrc.gov.uk.

A week later I had a phone call from the AO, because I was out by a few pence in my calculation; I resubmitted and about two weeks later I received a cheque. In my next payslip I received the refund, and at my PAYE year end everything balanced. :-)

[Greg@CapitalCity]

The two main options that have been discussed here are;
(1) Put through the personal tax return after April 2012, and claim the tax refund then;
(2) Collect the PAYE overpayment through your company payroll;

In both cases you will not actually GET any money from the HMRC until after April 2012 (for (1) after you have filed your personal tax return, or for (2) after your company has filed its end of year PAYE return), and in my experience the personal tax refunds come through quicker than the credits on a company PAYE account.

[psychocandy]

Does that get the money back from HMRC, or just mean that YourCo refunds the tax to you personally and HMRC still sort it out at year end?

I had the same thing when I started. I rushed through the self assessment in April and got the money back in June.

How could the company refund the money to you? This would be pointless I guess......

[VectraMan]

Make yourself a PAYE employee of your company.

Put your already paid tax into the data tables as a director and pay yourself £0.01 for the month. This will cause a big tax refund through PAYE.

Does that get the money back from HMRC, or just mean that YourCo refunds the tax to you personally and HMRC still sort it out at year end?

I had the same thing when I started. I rushed through the self assessment in April and got the money back in June.

[psychocandy]

Make yourself a PAYE employee of your company.

Put your already paid tax into the data tables as a director and pay yourself £0.01 for the month. This will cause a big tax refund through PAYE.

Ah. I see. Yep, just registered for PAYE anway. Sounds good - thanks. Will speak to my accountant about this.