12 Replies Latest reply: Jan 26, 2013 12:05 AM by Liam Trythall RSS

Tax basis during transfer UK payroll

shilpashree MR
Currently Being Moderated

Hi Experts,

 

I have a scenario – one employee is on week1/month1 tax basis as per IT0065 records.

This employee is transferred from one company code to another effective 01.12.2012

His company code and payroll area is changed. In this situation should the tax figures get transferred?

 

i.e. his taxable pay till date and tax paid till date in December pay slip should be from  April or only December’s value should be displayed.

How is cumulative and week1/month1 tax basis different in this situation?

 

Please let me know the details about these two tax codes in case of transferes.

 

Regards,

Shilpa

  • Re: Tax basis during transfer UK payroll
    vijay amarachintha
    Currently Being Moderated

    Shilpa,

     

    From your scenario, If employee transfered internally from one company code to another then have you used same personal number.

     

    If yes then run a P45 for that employee with previous payroll area and system will create IT0065 with previous earnings and tax paid from 01.12.2012.

     

    Note: cost centres are linked to company code level so you should delimit CC for 30.11.2012 before run P45.

     

    If you used new personal number then run P45 with old payroll area and get previous earnings and tax paid amounts. Create a new IT0065 record for new personal no with P45 details, it will solve the problem.

    • Re: Tax basis during transfer UK payroll
      shilpashree MR
      Currently Being Moderated

      Hi Vijay,

       

      Thank you for your response.

      Yes the same employee number is used. Ok once i run P45 for this employee and the run december payroll. Will that taxable pay till date and tax paid till date have values only from december? or will it cumulate all the values for the entire year as teh employee number used is same?

       

      Regards,

      Shilpa

      • Re: Tax basis during transfer UK payroll
        vijay amarachintha
        Currently Being Moderated

        Shilpa,

         

        If your using same emp no, when you run P45 for old payroll area, system will create a new record example 01.12.2012 and trasfered YTD figures into that record.

        Run december payroll it will show YTD of nov + dec taxable = YTD dec on the payslip.

         

        To cross check run P35 report and check P60 YTD figures.

         

        VJ

        • Re: Tax basis during transfer UK payroll
          shilpashree MR
          Currently Being Moderated

          Hi Vijay.. thank you.

           

          One last question. Is this true for both cumulative and week1/month1 tax basis?

          Because my client is expecting system to start YTD values from zero in december in case of week1/month1 tax basis.

           

          Reagrds,

          Shilpa

          • Re: Tax basis during transfer UK payroll
            Nadir Sheikh
            Currently Being Moderated

            Dear Shilpa

             

            Cumulative tax basis – mean tax should cumulative on YTD (Year to Date) basis

            Eg. Taxcode is 810L

                  Employee join the organization in the month of January -2013 (1st salary in this financial Year)

                 January salary is GBP – 10000

                Taxable income – 3245.84 (Tax Code 810L Means – 8105 GBP consider as free allowances)

                 Tax Paid  - 648.40

            Calculation : 8105 GBP is free allowance for full year

                                 Monthly free allowances is -675.41

                                Employee get his 1st salary in the month of Jan, then Free allowances consider till Jan

                               675.41*10= 6754.16

             

            Week /month on basis

            Eg. Taxcode is 810L

                  Employee join the organization in the month of January -2013 (1st salary in this financial Year)

                 January salary is GBP – 10000

                Taxable income – 10000 ( Free allowance not applicable week/Month on Basis)

                 Tax Paid  - 3156.76

            Note : Mostly tax calculated on cumulative basis

            Tax is calculated using a week 1/month 1 basis.
            Whereas most tax is calculated on a cumulative basis, it is sometimes necessary to use this method instead, as where employees who are paid on a weekly basis are due to be paid on the last day of the year. This is because the cumulative basis only works with a year of 52 weeks and, were payroll to fall on the last day of the year, that would be the 53rd week.

             

            Thanks

            Nadir

    • Re: Tax basis during transfer UK payroll
      Harish Krishnan
      Currently Being Moderated

      Do you need to run a P45 for an employee who is transferred, but keeps his old personnel number? Are you sure about that?

  • Re: Tax basis during transfer UK payroll
    Liam Trythall
    Currently Being Moderated

    Hi Shilpa,

     

    A P45 will need to be issued if the new company code / payroll area has a different Employers' PAYE reference number.

    If a P45 is issued, because the tax code is month 1 / week 1, the taxable pay and tax paid to date values will not appear on part 3 of the form and should not be applied to their new post - only the tax code will be transferred. (The YTD values will still be reported to HMRC on P45 part 1)

     

    If the tax code was cumulative then the tax code and YTD values would be transferred onto the new post.

     

    Hope this helps

     

    Thanks

    Liam

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