The Student Room Group

Paye tax

Was working as a part time tutor at a school. Got my payslip today, turns out 20 percent of the gross pay has been deducted by PAYE. I thought any income upto £12570 would have 0% deductions?

Anything I could do?
Original post by tamilGuy.
Was working as a part time tutor at a school. Got my payslip today, turns out 20 percent of the gross pay has been deducted by PAYE. I thought any income upto £12570 would have 0% deductions?

Anything I could do?

Two things:
1. You may be on the wrong tax code, which will be printed on your pay slip. It should be 1257L if they think you're eligible for the £12,570 personal allowance. If it's one of the emergency tax codes, like 0T, then it means you're employer doesn't know what tax to deduct and so has assumed it should tax all your income. If this is the case, contact the payroll team to sort it out.
2. That £12,570 is an annual figure. If your salary is £25,000 per year, they're not going to deduct zero tax for the first 6 months (until you reach £12,570) and then start taxing the rest. It's spread out over the year. So you'll pay tax on income over about £1,000 per month - on the assumption that your salary will continue for the full year.
Reply 2
Original post by DataVenia
Two things:
1. You may be on the wrong tax code, which will be printed on your pay slip. It should be 1257L if they think you're eligible for the £12,570 personal allowance. If it's one of the emergency tax codes, like 0T, then it means you're employer doesn't know what tax to deduct and so has assumed it should tax all your income. If this is the case, contact the payroll team to sort it out.
2. That £12,570 is an annual figure. If your salary is £25,000 per year, they're not going to deduct zero tax for the first 6 months (until you reach £12,570) and then start taxing the rest. It's spread out over the year. So you'll pay tax on income over about £1,000 per month - on the assumption that your salary will continue for the full year.

Hi,

thanks for your reply!! The tax code does say 0T. Just want to add a bit of context, I worked from March till mid May and they only paid me a total of £X this month. Does this mean, they assume my yearly earnings will be £12X? I'm asking because if thats the case then, £12X > 12570, so I can understand the deduction of 20 percent.

Thanks!
Original post by tamilGuy.
Hi,

thanks for your reply!! The tax code does say 0T. Just want to add a bit of context, I worked from March till mid May and they only paid me a total of £X this month. Does this mean, they assume my yearly earnings will be £12X? I'm asking because if thats the case then, £12X > 12570, so I can understand the deduction of 20 percent.

Thanks!

If you're tax code is 0T it means that their payroll processing had no knowledge of your personal allowance and assumed that you should get taxed at 20% the moment you earn £1. So they've made no assumptions about how much you'll earn during the year - they've just taxed you on every penny.

This often happens if you didn't provide them the P45 which your previous employer provided to you (so they didn't know how much of your personal allowance you've already used in that tax year), or they didn't "onboard" you completely to gather all the information they need to establish your tax status.

You've said "I worked from March till mid May" but your first post said "Got my payslip today" (payslip, singular). Does that mean you have a single payslip to cover that entire period? Or were March and April fine, and it's only gone wrong in May? If you have March and April pay slips, what tax code is on those?

Did you have a previous job before this one? That will have ended in the previous tax year. Does the P45 for that job show that your earner over £12,570 that tax year?

Are you still in contact with the school? Are you still working there? Did they issue you a P45 when you left? Does it show how much tax they deducted from your salary?

Once you gather all the information (payslips, P45s, start/end dates, etc.) I suggest you call HMRC on 0300 200 3300 (Monday to Friday: 8am to 6pm). Make sure to mention that your tax code is 0T - as that's the cause of this issue.
Reply 4
Original post by DataVenia
If you're tax code is 0T it means that their payroll processing had no knowledge of your personal allowance and assumed that you should get taxed at 20% the moment you earn £1. So they've made no assumptions about how much you'll earn during the year - they've just taxed you on every penny.

This often happens if you didn't provide them the P45 which your previous employer provided to you (so they didn't know how much of your personal allowance you've already used in that tax year), or they didn't "onboard" you completely to gather all the information they need to establish your tax status.

You've said "I worked from March till mid May" but your first post said "Got my payslip today" (payslip, singular). Does that mean you have a single payslip to cover that entire period? Or were March and April fine, and it's only gone wrong in May? If you have March and April pay slips, what tax code is on those?

Did you have a previous job before this one? That will have ended in the previous tax year. Does the P45 for that job show that your earner over £12,570 that tax year?

Are you still in contact with the school? Are you still working there? Did they issue you a P45 when you left? Does it show how much tax they deducted from your salary?

Once you gather all the information (payslips, P45s, start/end dates, etc.) I suggest you call HMRC on 0300 200 3300 (Monday to Friday: 8am to 6pm). Make sure to mention that your tax code is 0T - as that's the cause of this issue.

Thanks again!

This was my first part time job! So I didnt have a P45 when I joined in March.
Yes, I got a single payslip covering the full period.
In contact with the school, not working there - but will rejoin probably in september. They haven't issued me a P45.

Could I perhaps speak directly to the person in charge of human resources at the school to resolve this issue? or would it have to go through HMRC?
Reply 5
I think you'll get a tax rebate at the end of the tax year.
Original post by tamilGuy.
Thanks again!

This was my first part time job! So I didnt have a P45 when I joined in March.
Yes, I got a single payslip covering the full period.
In contact with the school, not working there - but will rejoin probably in september. They haven't issued me a P45.

Could I perhaps speak directly to the person in charge of human resources at the school to resolve this issue? or would it have to go through HMRC?

To be honest in my experience usually the employer and HMRC figure this out and you just get a rebate in the next tax year, but if you need it sooner then you can follow up now. Ultimately though as the tax has been paid to HMRC they are the ones that have to pay it back to you if you were taxed incorrectly.
Original post by tamilGuy.
Thanks again!

This was my first part time job! So I didnt have a P45 when I joined in March.
Yes, I got a single payslip covering the full period.
In contact with the school, not working there - but will rejoin probably in september. They haven't issued me a P45.

Could I perhaps speak directly to the person in charge of human resources at the school to resolve this issue? or would it have to go through HMRC?

If you're going to return to the school in September, and can wait until then to get it sorted out, then you can do so. What could happen is that they adjust the tax you pay from September onward to allow for the fact that you've overpaid during March / April / May. Note, however, that March (and the first few days of April) was in the previous tax year, so I don't know how easy it would be to recover that overpaid tax. Hopefully there'll be a way.

I suspect that "the person in charge of human resources" will direct you to whoever looks after the payroll (which is likely to be someone else). However, given that they've caused this issue, they might not be best placed to sort it out. It's your call, really. If it were me, I'd contact HMRC about my tax code anyway.
Reply 8
Original post by artful_lounger
To be honest in my experience usually the employer and HMRC figure this out and you just get a rebate in the next tax year, but if you need it sooner then you can follow up now. Ultimately though as the tax has been paid to HMRC they are the ones that have to pay it back to you if you were taxed incorrectly.


Original post by DataVenia
If you're going to return to the school in September, and can wait until then to get it sorted out, then you can do so. What could happen is that they adjust the tax you pay from September onward to allow for the fact that you've overpaid during March / April / May. Note, however, that March (and the first few days of April) was in the previous tax year, so I don't know how easy it would be to recover that overpaid tax. Hopefully there'll be a way.

I suspect that "the person in charge of human resources" will direct you to whoever looks after the payroll (which is likely to be someone else). However, given that they've caused this issue, they might not be best placed to sort it out. It's your call, really. If it were me, I'd contact HMRC about my tax code anyway.

Thanks both! I'll drop an email to the school, see where it takes me. Thanks again for your help, @DataVenia learnt quite a lot from you as well, thank youu!
Reply 9
I contacted HMRC about the tax code and they've changed the tax code to 1257L. Just recieved correspondence from HMRC for the change. When may I expect the income tax taken to be returned? Will it be refunded fully or do you recon it will be taken care of when charging taxes in the future?
Original post by tamilGuy.
I contacted HMRC about the tax code and they've changed the tax code to 1257L. Just recieved correspondence from HMRC for the change. When may I expect the income tax taken to be returned? Will it be refunded fully or do you recon it will be taken care of when charging taxes in the future?

That's great news. That's the normal code that most people are no.

For many people, any over-payment in tax would be returned by offsetting it against tax liabilities in the future. In other words, you'd pay less tax next month (or over the next few months) than you should to "undo" the over-payment. As your post #3 says you're likely to earn over the personal allowance this year, meaning you would be subject to some tax, I suspect that this is what'll happen. Read your next pay slip carefully. :smile:
Original post by tamilGuy.
I contacted HMRC about the tax code and they've changed the tax code to 1257L. Just recieved correspondence from HMRC for the change. When may I expect the income tax taken to be returned? Will it be refunded fully or do you recon it will be taken care of when charging taxes in the future?


As above or alternately like I got, a check at the end of the tax year for the overpayment.
Reply 12
Oh, another question relating to taxes. I'm doing paid tutoring online too (thru a company), since this will count as self-employment, how would I go about paying taxes for this? I don't expect to earn more than a £1000 over the current tax year, what rules apply? Would I have to declare this to the HMRC? Thanks!
Original post by tamilGuy.
Oh, another question relating to taxes. I'm doing paid tutoring online too (thru a company), since this will count as self-employment, how would I go about paying taxes for this? I don't expect to earn more than a £1000 over the current tax year, what rules apply? Would I have to declare this to the HMRC? Thanks!

Is £1,000 your only income? Or is this on top of another job / other source of income?
Reply 14
Original post by DataVenia
Is £1,000 your only income? Or is this on top of another job / other source of income?


this self-employed online tutoring will be about a 1000, the other part time school job might be a little more.
Original post by tamilGuy.
this self-employed online tutoring will be about a 1000, the other part time school job might be a little more.

Apologies. I hadn't paid sufficient attention to the thread I was in and just blindly replied, forgetting that I knew about your role tutoring within a school.

You're probably going to want to keep the online tutoring income just under the £1,000. That's the threshold above which you need to register as a Sole Trader with HMRC. Doing so is just admin you could do without. Also, you'd be obliged to pay Income Tax on your profits, Class 4 NI contributions on your profits, and Class 2 NI contributions of £3.45 per week - even if you earn nothing that week. (Profits essentially means the money you bring-in from online tutoring, less any costs associated with proving that online tutoring. Also, the same £12,570 personal allowance applies.)

This is assuming that the company through which this is arranged just act as an introduction agent, or similar, and don't take on the role of employer. If they do, none of the above applies.
(edited 10 months ago)
Reply 16
Original post by DataVenia
Apologies. I hadn't paid sufficient attention to the thread I was in and just blindly replied, forgetting that I knew about your role tutoring within a school.

You're probably going to want to keep the online tutoring income just under the £1,000. That's the threshold above which you need to register as a Sole Trader with HMRC. Doing so is just admin you could do without. Also, you'd be obliged to pay Income Tax on your profits, Class 4 NI contributions on your profits, and Class 2 NI contributions of £3.45 per week - even if you earn nothing that week. (Profits essentially means the money you bring-in from online tutoring, less any costs associated with proving that online tutoring. Also, the same £12,570 personal allowance applies.)

This is assuming that the company through which this is arranged just act as an introduction agent, or similar, and don't take on the role of employer. If they do, none of the above applies.

Haha no worries!

I read about the threshold and wasn't too sure if I understood it well, that's why I asked. Thanks for your clarification! Can I just confirm if I've got this right. Leaving the school tutoring and any taxes associated with it aside, if I keep the profits (as you defined) from this tutoring job < £1000, I wouldn't be obliged to report this income to the HMRC (and so no IT/ NI will have to be paid)? Also, is this state (where you are not required to declare if <1000) called something so I can refer to it if i need it in the future?

The company introduces students, yes, and they do charge the student party a commission for the "online service". I believe that wouldn't count as taking on the role of an employer?

Thanks so muchhh!
Original post by tamilGuy.
Haha no worries!

I read about the threshold and wasn't too sure if I understood it well, that's why I asked. Thanks for your clarification! Can I just confirm if I've got this right. Leaving the school tutoring and any taxes associated with it aside, if I keep the profits (as you defined) from this tutoring job < £1000, I wouldn't be obliged to report this income to the HMRC (and so no IT/ NI will have to be paid)? Also, is this state (where you are not required to declare if <1000) called something so I can refer to it if i need it in the future?

The company introduces students, yes, and they do charge the student party a commission for the "online service". I believe that wouldn't count as taking on the role of an employer?

Thanks so muchhh!

You are correct. Unless your income is above the sole trader earnings threshold (which is what I'd call it), currently £1,000 per year, then there is no need to set-up as a sole trader, and no tax or NI to pay. There are further details here.

Your also right about the company not being your employer.
Reply 18
Original post by DataVenia
You are correct. Unless your income is above the sole trader earnings threshold (which is what I'd call it), currently £1,000 per year, then there is no need to set-up as a sole trader, and no tax or NI to pay. There are further details here.

Your also right about the company not being your employer.

Very nice, thanks a lot!

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