Salary/Accounting/Tax code

[pmeswani]

In short, no.

Before I employed the fresh grad, I was trying to be careful, so I asked a lot of questions, but the accoutnant sort of just say yes yes yes yes yes to everythinig, until I did what I have described... now he just wants to know how much do I want to pay this fresh grad in net terms.



No problem, you are just trying to help me out.

hmmm.... ok, this sounds stuipd, but i really don't remember if i register with PAYE... but i will check.

Yes, I got him to fill in a P46 and sent to the accountant as requested.

What do you mean by the money is with accountant? the way I'm set up with my accountant is that they will never touch my money. They will usually send me some kind of instruction where to send money and when. but that's pretty much it. so i guess the answer is no.

I think the answer for the last question is, yes, I knew he never worked in the last tax year, and £480 pounds in 2011-2012 tax year will not attract any tax/NI. so i sent £480 directly to his account from my company's account, just like how i would pay myself. and with the same logic, the fresh grad only income is from the one week he worked for me, so that's another £480 going from my company to him.

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sorry guys, lunch time is over, will try to get back online later tonight.

Daft idea. Any reason why your Grad friend cannot retrospectively register as self employed and fill out a Self Assessment as a one off? Or are you trying to save him/her the trouble?

[LisaContractorUmbrella]

In short, no.

Before I employed the fresh grad, I was trying to be careful, so I asked a lot of questions, but the accoutnant sort of just say yes yes yes yes yes to everythinig, until I did what I have described... now he just wants to know how much do I want to pay this fresh grad in net terms.



No problem, you are just trying to help me out.

hmmm.... ok, this sounds stuipd, but i really don't remember if i register with PAYE... but i will check.

Yes, I got him to fill in a P46 and sent to the accountant as requested.

What do you mean by the money is with accountant? the way I'm set up with my accountant is that they will never touch my money. They will usually send me some kind of instruction where to send money and when. but that's pretty much it. so i guess the answer is no.

I think the answer for the last question is, yes, I knew he never worked in the last tax year, and £480 pounds in 2011-2012 tax year will not attract any tax/NI. so i sent £480 directly to his account from my company's account, just like how i would pay myself. and with the same logic, the fresh grad only income is from the one week he worked for me, so that's another £480 going from my company to him.

Thanks for the clarification You should be ok in these circumstances as long as you issue a P45 to your friend so that the initial earnings in April will be recorded in his income if he works again during this financial year - his earnings for April (and March come to that) fall below tax/NI thresholds so there will be nothing owing to HMR&C to date.
May be an idea to consider another accountant - they should have been able to sort this one for you

[Friday Blue]

Erm... did your accountant not suggest anything?

In short, no.

Before I employed the fresh grad, I was trying to be careful, so I asked a lot of questions, but the accoutnant sort of just say yes yes yes yes yes to everythinig, until I did what I have described... now he just wants to know how much do I want to pay this fresh grad in net terms.

Have you registered for PAYE with HMR&C? Has the person who worked for you completed a P46 and if so have you sent it to your accountant? Can you confirm the money that you owe to your friend is with your accountant? You ask whether you should ask your friend to return money to you - does this mean you paid him without any deductions?

Sorry for the questions but your post is not that clear

No problem, you are just trying to help me out.

hmmm.... ok, this sounds stuipd, but i really don't remember if i register with PAYE... but i will check.

Yes, I got him to fill in a P46 and sent to the accountant as requested.

What do you mean by the money is with accountant? the way I'm set up with my accountant is that they will never touch my money. They will usually send me some kind of instruction where to send money and when. but that's pretty much it. so i guess the answer is no.

I think the answer for the last question is, yes, I knew he never worked in the last tax year, and £480 pounds in 2011-2012 tax year will not attract any tax/NI. so i sent £480 directly to his account from my company's account, just like how i would pay myself. and with the same logic, the fresh grad only income is from the one week he worked for me, so that's another £480 going from my company to him.

-----
sorry guys, lunch time is over, will try to get back online later tonight.

[Friday Blue]

Assuming this fresh grad had no other income in the last tax year, £480 per month is free of income tax and below the secondary earnings threshold where NI kicks in. Basically, what you have paid him should be it, with no further payments for tax or NIC.

Your accountant should be able to process this as this is what happened in reality and confirm the figures. I don't think there's a need to ask the grad to repay anything.

Thanks for the quick reply, you have just confirmed what I think should happened. Yes, the grad has no other income, so it makes sense he will pay no tax and no NI.

In this case i will just confirm this with my accountant. Cheers.

[LisaContractorUmbrella]

Have you registered for PAYE with HMR&C? Has the person who worked for you completed a P46 and if so have you sent it to your accountant? Can you confirm the money that you owe to your friend is with your accountant? You ask whether you should ask your friend to return money to you - does this mean you paid him without any deductions?

Sorry for the questions but your post is not that clear

[northernladuk]

Erm... did your accountant not suggest anything?

[Craig@Clarity]

Assuming this fresh grad had no other income in the last tax year, £480 per month is free of income tax and below the secondary earnings threshold where NI kicks in. Basically, what you have paid him should be it, with no further payments for tax or NIC.

Your accountant should be able to process this as this is what happened in reality and confirm the figures. I don't think there's a need to ask the grad to repay anything.

[Friday Blue]

The story goes something like this:

My client wanted me to take on abit more work, so asked me to provide a second person to take care of some mikey mouse tasks, just for a very short period of time. So i went and grabbed a fresh grad from my uni and employed him for 2 weeks.

Our agreed rate was 12 pounds per hour, 40 hours a week, but stuipd old me forgot to say, this is before tax/ni... But this person in some way is my friend, so I don't want to burn any bridges; plus he may be useful in future days now client is happy with his work. So i don't want to just play hardball and p him off. (plus the PAYE/NI should be quite low, my company can absorb the hit)

He never worked a day in his life, so i thought the maths will be quite straight forward. £480 for March, pay in one lump, then pay him again in at the end of this month another 480. (he worked last week in March, first week in April, yes, couldn't have timed it worse). then let the accountant do the backward calculations and I will just make the PAYE/NI payment when the numbers come out.

But now my accountant tells me the maths is not so simple because all the tax code and stuff and i have to instruct them how much i want to pay this person (net amount).

So few questions here:

1, am i already in the brown stuff? Since my accountant made no mention of me doing this the wrong way when i made the march payment. (I made the payment on last day of march, and he has been holding the money for quite sometime and it passed the last day of last tax year)

2, Am I better off just ask this person to pay my company back and say £12 per hour inc tax then let accountant do the maths, and once all went through i just pay the difference out of my own pocket?

Thanks in advance