New client (now a limited company) was a freelance cameraman during 2011/12 tax year, some as an employee of a production company and some as self employed. As he worked on and off for the production company they did not issue a P45 but gave him a P60..all good so far. I sent him his tax return and the question of student loans came up, he said that he had made repayments through his salary but as none were showing on the P60 I got him to query this.
The payroll dept then said "Oh I expect you need the other P60" which covers you as staff (as opposed to freelance). They have sent a copy and I thought perhaps they had two schemes going, but the references are the same. This P60 shows about a quarter of the income of the first one and also the student loan deductions. Both P60's show full personal allowances. I have never come across anything like this before and not sure how to proceed- do I show these separately and hope that the return passes validation. Do I add them together as the references are the same, obvioulsy have to check that the figures for 2 and not included in 1, and by the way, how do you get two P60's for one empoyee under the same reference!
Replies (23)
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I'd be worried that
they had applied the personal allowance twice.
I think I would add them together (assuming you are not double counting).
Not that unusual
It's quite possible to have two separate employments with the same employer. Some payroll systems can handle two contracts and produce one P60, some can't and you would end up with two. HMRC will accept this.
I too am worried, though, about two lots of personal allownace.
Your choice
You can show separate employments or you can combine them as the PAYE reference is the same.
The advantage of keeping them separate is that it will be able to track the figures on the tax return to the P60s. if you combine them you may panic when the total doesn't agree to a P60 if you review it later.
This is quite a common scenario especially with Bank nurses who work full time for a particular health trust & also do overtime on the bank system. The bank work is set up as secondary employment.
Why?
This is quite a common scenario especially with Bank nurses who work full time for a particular health trust & also do overtime on the bank system. The bank work is set up as secondary employment.
What's the point?
The point is
They are separate employments with different terms and conditions including different rates of pay.This is quite a common scenario especially with Bank nurses who work full time for a particular health trust & also do overtime on the bank system. The bank work is set up as secondary employment.
What's the point?
Doctors in NHS Trusts
This is quite a common scenario especially with Bank nurses who work full time for a particular health trust & also do overtime on the bank system. The bank work is set up as secondary employment.
It's also common with NHS Trusts where specialists provide their services to different departments. I've had a doctor with the exact same scenario; two P60's, same reference and two lots of PA. I declared them on the return as separate employments to avoid a mis-match with that reported on the P14's to the Revenue which could lead to an unneccessary enquiry. The client has to, of course, pay the under-deducted tax.
well it maybe to do with the Film & TV regs
some types of jobs are deemed to be self employed an other not - in addition the NI treatment for some self employed persons is not straight forward and needs to be alculated thro payroll
from the manuals http://www.hmrc.gov.uk/manuals/esmmanual/ESM4112.htm
booklet http://www.hmrc.gov.uk/specialist/film_industry.htm
i would put in 2 employments and make a white note
Thanks all
I think i will do two separate pages after making sure there's no duplication...you learn something new every day!
BTW slightly off topic
there is a need for 2 employments on a computer payroll when someone changes status ie from employee to director
Why?
It's still possible to treat a director as an employee in certain situations and most payroll packages can deal with the change in any case.
Happens with Council employees too
I had a case earlier this year of a classroom assistant working part-time.
Actually, for first time 2011/12, had two P60 forms from the same (Council) employer.
Had gone from one part-time job to two for the same employer. Client didn't volunteer this information, it came to light when the one P60 provided to me didn't seem correct in terms of PAYE code number and tax deducted. After querying matters with the client it turned out that a second part-time employment had taken place and then client presented me with the second P60 form.
Nothing to do with freelancing, pure employment in this case. Initially confusing but eventually understood / unravelled.
Underpaid Student Loan
Part of the problem here will be that the splitting of salary artificially lowers the amount liable to Student Loan so the deductions are not as high as perhaps they should be.
Student loan
That should get picked up if the taxpayer is subject to self assessment or the taxpayers liability is reviewed later.
Never underestimate the predictability of stupidity
My favourite Bullet tooth Tony phrase
Was your client aware he had 2 P60's? If so why did he only give you one of them, what was he playing at?
Common problem
Clients seem to think you don't need information for business credit cards or deposit accounts.
Can also happen if switching timing of payments
This can also happen if switching timing of payments, say from weekly to monthly processing.
@mydoghasfleas
The two P60s isn't the problem!
There are two errors here I can see from the employer:
- the tax code should be split between the employments - although if the employer has done P45/P46 procedures correctly the onus is then back on HMRC
- the employer should have given both P60s to the employee by 19th May. Not doing so is an offence
And of course the employee should then give you both!
Have come across this with a Police Officer, retired, one payslip for pension paid by the force. He then went back to work for them in another capacity. So 2 P60's. One showed full allowance and the other BR code. Picked up by HMRC for a number of years. Massive underpayment of tax as the combined income made him higher rate tax payer.
Another time acted for a Consultant, who when training was paid hy one NHS trust and then by another on qualifing, same payroll dept for a number of trusts. As the change of status and P45 were internal, and income when changing was a massive increase to salary, for some reason an assumption was made and a BR code used. A good half of the salary should have been 40% taxed. Again an underpayment.
Used ESC to stop repayment, in the second case wase told that the problem was a PAYE issue, (Section 78) if I remember right. So they were rejecting ESC and asking the employer to make good the repayment to HMRC. Employer can refuse, if they did then it was back to ESC. This was verbal from the tax office, explaining why it might be delayed. Dawned on me later that the government were the employer in this instance, so asking itself to make good the tax?
Assume tax is due because of 2 allowances used. Appeal using the PAYE regulations as the taxpayer is not at fault.
Early 80's remember 2 different tax offices giving 2 allowances to different employers. Same result ESC to cancel addition tax.
2 P60s
Probably not relevant to the original scenario, but if you submit a P60 to HMR&C, and later find out that it's incorrect, you have to issue another (and revised P35) for the difference only.
John
Why do they have to make it so complicated?
I mean, aren't we giving them money? It should be really simple.
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