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PAYE New Starter Checklist - Which Statement ?

New starter previously employed by his own company. Does Statement B or C on the checklist apply?

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PAYE is not my bag.  However one of my self assessment clients has recently taken on a new starter.  He was a director of his own company and has taken £4K as salary since 6/4/21.  He will not take any further salary in this or future years but is still employed by his company and so has not issued a P45.

Client has asked whether Statement B or C on the new starter checklist would be most apropriate for the  new joiner to tick.  I'm thinking Statement B so he at least gets some personal allowance, albeit on a M1 basis to start with.  Is this right or does the fact he's still effectively employed by his company force him into Statement C and no PAs to start with?

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By Hugo Fair
12th Oct 2021 12:52

For reference, the up-to-date checklist is at https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

Based on the info you've provided, the answer is clearly 'C'.

The intention of RTI is that it allows HMRC to see all of the employments for an individual taxpayer - and so, knowing the full picture, they can issue Tax Code notices in-year to (fairly) closely match a suitable Tax Code/Basis to the actual payments being received ... albeit usually a month or two later.

One (probably obvious) point: client must either terminate employment with his company OR continue to operate PAYE for it (and this includes RTI submissions even if he's not drawing pay).

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By accountaholic
12th Oct 2021 12:53

Statement C is correct as he still has another job.

On a practical level however, I would choose statement B which, as you say would give him an M1 basis. He/you should follow that up by contacting HMRC to give details of expected income for both jobs so they can allocate allowance accordingly.

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By Truthsayer
12th Oct 2021 13:34

Why not keep it simple. He issues himself with a P45 from his own company, and then his tax to date and code will be correct in the new employment. If he is no longer receiving a salary or benefits from his own company, he is not employed for the purposes of PAYE.

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By Sandnickel
12th Oct 2021 13:56

Your client does not determine which box the employee should tick. That is the responsibility of the employee.

If the employee is employed somewhere else then the employee should tick box c to indicate this. The employee can then discuss the tax code with HMRC to make sure they are on the correct code for their earnings.

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By tltodman
13th Oct 2021 15:55

Tick box C then get employee to call HMRC after the first RTI has been filed (and they know about the new employment) and ask them to allocate their tax code however they want to have it split

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