PAYE question

[Esk247]

Just wondering. We pay PAYE for an employee of the business but they only work a few hours a week for us, so we pay around £300 a month to them.

We are paying PAYE for them at around £60 a month but they've said that their other part time employers are not paying PAYE :| and they're working for a national chain, us being the smallest of the two employers.

Is that normal? or are we paying more than we should be? our accountant says its fine but I'm a bit miffed that we're paying an extra £60 a month plus the paperwork we have to keep and enter in online, it's probably costing us more like £150 a month all in.

 

[elaine@cheapaccounting]

Yes this can be the case.

What can happen is that the first job receives the personal allowance and the second (or more) job(s) are tax on a BR code - so all earnings at 20%.

[Tom will correct me if I am wrong]

 

[Newchodge]

You should not be 'paying' amything. You are deducting tax, based on their PAYE code, from their gross income, and forwarding that money to HMRC.

If your employee has more than one job, usually all of their PAYE code is allocated to one job, and all of their income in the second job is subject to tax, without any allowance, so you may appear to be deducting more than their other employer.

Who runs your payroll? This is pretty basic!

 

[elaine@cheapaccounting]

BTW - you don't pay the tax, they do! You collect it and pay it to HMRC. So I don't think I follow where it costs you an extra £150 / month.

You would still have to keep the paper work - especially when RTI comes in next year.

If they have paid too little or too much tax it is picked up in the annual PAYE reconciliation (to be replaced by RTI) from April 2013.

 

[Esk247]

BTW - you don't pay the tax, they do! You collect it and pay it to HMRC. So I don't think I follow where it costs you an extra £150 / month.
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Well it's deducted from the earnings, so the employee gets £240 and not the £300.

I of course would prefer the employ got £300 instead of £240

It does work out at 20% which is fine, it was just annoying me that we, as the smaller employer, were extracting the £60 a month.

It makes sense now though, thanking you kindly.

 

[elaine@cheapaccounting]

Well it's deducted from the earnings, so the employee gets £240 and not the £300.

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It still costs you £300 - £240 to them and £60 to HMRC.

So aside from paper work it costs no more to you.