Husband and wife company.Both Directors on annual scheme. No FPS's submitted this tax year.
Husband is now getting a new job and wants P45 to ensure not taxed at BR or emergency code etc for that new job. Will still be a director but no salary. Wife will be receiving usual minimum salary.
I am assuming P45 can be issued showing NIL pay and tax
Does a FPS need to be submitted? If so that will show NIL = yes?
Then does an FPS's have to be submitted showing Nil for the remainder of the year until the March payment when the wife's salary only will be declared as paid?
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Replies (7)
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One FPS
If it's an annual scheme you can file one FPS a year, and that can be zero (or whatever) pay and a leave date. No nil EPS is needed. However if you pay one now and the other in March they will cancel the annual status of the scheme. You maybe better having him in two jobs for awhile.
Or ...
I agree, but an alternative would be to submit the one annual FPS now in Month 8 to report both the husband as leaving and the wife's salary for the whole year. This would preserve the annual status.
Tax code at new employer
I think the OP comment "Husband ... wants P45 to ensure not taxed at BR or emergency code etc for that new job" is being ignored.
In the absence of a P45 the new employer will get him to complete a Starter Declaration which, depending on his answers, will generate a tax code for his initial earnings of 1060L (on a W1/M1 basis) or BR or 0T (on a W1/M1 basis) ... unless he's economical with the truth and ticks the box saying ""This is my first job since 6 April 2015 and I haven't received taxable etc etc"
The only 'accurate' way to resolve this would be to submit an FPS that includes his Leaving date.
This does NOT require "FPS's to be submitted showing Nil for the remainder of the year" ... but (as you are no longer operating an annual scheme) does require a single EPS to be submitted declaring that no FPS will be due for all the remaining months of the year (apart of course from the one when the wife is to be paid). You can submit the other FPS (presumably for month 12) - and request that the scheme be made an annual one again for 2016-17.
One extra EPS (and putting the scheme back to annual next year) may not be seen as a great hurdle if it gets the husband the tax code that he wants now!
Of course, Euan's suggestion is even simpler IF you don't mind paying any Tax/NICs (if any are payable on the wife's putative earnings) several months early - or the possibility of having to submit an EYU later if your estimate of her earnings needs correcting.
However
If you submit one FPS this year with both employees and it is a different month than the one you submitted last year they will also cancel the annual status. This will require you to submit nil EPS's for the unpaid months. Is any of this worth it for the aim of getting the tax code 'right'?
Are you sure?
If you submit one FPS this year with both employees and it is a different month than the one you submitted last year they will also cancel the annual status.
The HMRC guidance says that they would change your expected single annual submission from March to November, but would retain it as an annual scheme with November as the expected month of submission in future years.
Not sure
It has been our customers' experience, but I'm not sure whether that's by accident or design.