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Thread: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

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    Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    HMRC website doesn't say, and the tax office are always too busy to answer the phone, so I was wondering if anybody knew.

    A couple of years back, I was earning way under the threshold but got taxed on an emergency tax code - I rang up, and had the whole lot refunded in the next payslip.

    Now I'm in a position whereby I'm earning more than enough per month to pay income tax, but my contract will actually end before I reach the threshold. On the basis that I've no intention of working between the end of this contract and April next year, and thus will never reach that threshold, will HMRC agree not to tax me if I inform them of the situation? Or is there nothing I can do to stop them?

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    AFAIK - you'll have to lodge a return at the end of the year to get your money back. There is no way for HMRC to determine that you won't have more income in the remaining part of the year, and so will continue to collect tax.
    Emergency tax code is a very different thing. There you are taxed at max rate, and as soon as you provide the P45 or other docs, your refund will be paid.
    Society's to blame,
    Or possibly Atari.

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    IFAK you will get a rebate rather than you stop paying tax

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by snootyjim View Post
    HMRC website doesn't say, and the tax office are always too busy to answer the phone, so I was wondering if anybody knew.

    A couple of years back, I was earning way under the threshold but got taxed on an emergency tax code - I rang up, and had the whole lot refunded in the next payslip.

    Now I'm in a position whereby I'm earning more than enough per month to pay income tax, but my contract will actually end before I reach the threshold. On the basis that I've no intention of working between the end of this contract and April next year, and thus will never reach that threshold, will HMRC agree not to tax me if I inform them of the situation? Or is there nothing I can do to stop them?
    simple answer - no

    if/when you return to work later in the tax year, your unused tax allowance would be taken into consideration, and either less tax paid or a tax rebate given. tax is cumulative, so with PAYE as an employee (i presume you aren't self employed), you take your annual tax allowance, divide by 12 months or 52 weeks and multiply by the tax month/week you are in and that's the allowance you have accrued to date

    students can sign a P38(s) and use the full allowance if they only work during school/university holidays, but i presume that isn't relevant here

    if you don't return to work by the end of the tax year so you get the rebate in your pay, you will need to apply to HMRC directly for a rebate

    this week the phones are busy as it was a bank holiday

    with your last example, your employers obviously received a tax coding notification and that corrected your tax and gave a tax rebate. i presume you started the job part way through the tax year and it was your only job that tax year, thus the removal of the week one/month one basis made your tax code cumulative and gave you the previous unused tax allowance before you started with them, thus the automatic rebate

    if your employer paid you a tiny amount in the month following you leaving, then that should give you a small rebate, but it won't be much as may is only month 2

    how come you won't be working from may 2010 to april 2011 or later? will you be claiming benefits?

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by uni View Post
    simple answer - no

    if/when you return to work later in the tax year, your unused tax allowance would be taken into consideration, and either less tax paid or a tax rebate given. tax is cumulative, so with PAYE as an employee (i presume you aren't self employed), you take your annual tax allowance, divide by 12 months or 52 weeks and multiply by the tax month/week you are in and that's the allowance you have accrued to date

    if you don't return to work by the end of the tax year so you get the rebate in your pay, you will need to apply to HMRC directly for a rebate
    Yeah, by my calculations I'll have about a grand free by the time this job is fully paid up and finished, was just hoping I wouldn't have to wait until May next year to actually get that money.

    if your employer paid you a tiny amount in the month following you leaving, then that should give you a small rebate, but it won't be much as may is only month 2
    Eh? Sorry not with you there!

    how come you won't be working from may 2010 to april 2011 or later? will you be claiming benefits?
    I'm going to university in October, so I've just got September unaccounted for. Don't know exactly what I'm eligible for - if anything - during that time, but I haven't checked yet, figured I had a bit of time before it happened so no rush.

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    The best suggestion I can make is to persist with the phone calls .... or pop into the tax office in person and talk to them.

    There certainly are special provisions for students that only work in holidays, and not during term time. Quite how they'd impact on you I'm not sure, but the best way to be sure is to explain your situation directly to HMRC. Contrary to the popular image, my experience has always been that they are quite helpful.

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by snootyjim View Post
    Eh? Sorry not with you there!
    The tax year starts in April, so you have only paid 1 month tax so far this year - 2 come the end of the month, so however much tax you have paid so far won't be huge amounts

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by Flash477 View Post
    The tax year starts in April, so you have only paid 1 month tax so far this year - 2 come the end of the month, so however much tax you have paid so far won't be huge amounts
    Right, I see. I was just confused by the reference to "leaving", but I'm with it now.

    No, it's not huge amounts, I'd just prefer to get hold of it sooner rather than later so I can invest it somewhere.

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by Saracen View Post
    The best suggestion I can make is to persist with the phone calls .... or pop into the tax office in person and talk to them.

    There certainly are special provisions for students that only work in holidays, and not during term time. Quite how they'd impact on you I'm not sure, but the best way to be sure is to explain your situation directly to HMRC. Contrary to the popular image, my experience has always been that they are quite helpful.
    once tax is paid as he has done, he will need to wait until he is paid again in the tax year and hand over his p45 before he is paid, to get a tax rebate. the P38(s) form didn't apply when he was paid as he wasn't on holiday from school/college. once he starts school/college he could fill in a P38(s) if he got a job during the xmas hols, but that would only stop him paying tax, it wouldn't give him the rebate. if he gave over his P45 instead of a P38(s) he would get a rebate in his first pay (unless he was paid a lot), but may subsequently pay tax if he was working full time over xmas. he couldn't give a P45 and then a P38(s), only one or the other

    the P38(s) is basically a declaration that you are a student and only working during school/university holidays, and your total earnings for the year will be less than £6475, thus essentially it gives you your years tax allowance to use in small chunks of days instead of spread over the year. contrary to popular belief, students aren't exempt from tax, they have the same tax allowance as the standard one, only it's not spread out over the full year. so you could earn £6k in a week on a P38(s) and not pay tax, as long as the rest of your pay in the year is £475 or less. you are still liable to NI in the usual way however

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by snootyjim View Post
    Eh? Sorry not with you there!
    tax is cumulative, thus each month you have another months worth of tax allowance. tax adjusts automatically as long as you aren't on a month 1 tax code, thus by month 2 if the combined gross pay is under the tax threshold for the 2 months, your tax would be reduced accordingly, or a tax rebate given. may is month 2, thus if you were on the books in june, month 3, but not paid anything, or just paid £1 or so, you would have junes tax allowance, thus 3 months tax allowance and 2 months pay, thus you would normally expect to get a tax rebate. but if you left in may and got a P45 that scenario won't happen. if you have unused holiday entitlement to be paid, you could ask that to be paid in the following month instead, but it's up to your employer if they want to do that or not, they don't have to, and will probably want to pay it all in your final pay in may or whenever you leave, so everything is done and dusted and there is less chance of overpaying you in error in the next month

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by uni View Post
    tax is cumulative, thus each month you have another months worth of tax allowance. tax adjusts automatically as long as you aren't on a month 1 tax code, thus by month 2 if the combined gross pay is under the tax threshold for the 2 months, your tax would be reduced accordingly, or a tax rebate given. may is month 2, thus if you were on the books in june, month 3, but not paid anything, or just paid £1 or so, you would have junes tax allowance, thus 3 months tax allowance and 2 months pay, thus you would normally expect to get a tax rebate. but if you left in may and got a P45 that scenario won't happen. if you have unused holiday entitlement to be paid, you could ask that to be paid in the following month instead, but it's up to your employer if they want to do that or not, they don't have to, and will probably want to pay it all in your final pay in may or whenever you leave, so everything is done and dusted and there is less chance of overpaying you in error in the next month
    Right, all makes sense Thanks for the help!

    I guess at the end of the day, as long as I send them the correct paperwork I should get all of my money back - so I won't lose out whatever happens, which is the main thing in the end. Even if I've got to wait a while, as long as I get it. Anyway, it'll make a nice little bonus

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by snootyjim View Post
    Right, all makes sense Thanks for the help!

    I guess at the end of the day, as long as I send them the correct paperwork I should get all of my money back - so I won't lose out whatever happens, which is the main thing in the end. Even if I've got to wait a while, as long as I get it. Anyway, it'll make a nice little bonus
    if you can get a part time job later in the tax year, even if you only work a couple of hours it should give you a tax rebate as long as you give them the p45 and ensure they process it correctly and your tax code is 647L and not on a week one/month one basis. if you wait on HMRC you could literally be waiting another six months easily as they take forever to do nothing. so see if you can get a part time job at xmas (but give the P45 instead of signing a P38(s)) or easter

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    Re: Possible to Stop HMRC Charging Income Tax - Impending End of Contract

    Quote Originally Posted by uni View Post
    if you can get a part time job later in the tax year, even if you only work a couple of hours it should give you a tax rebate as long as you give them the p45 and ensure they process it correctly and your tax code is 647L and not on a week one/month one basis. if you wait on HMRC you could literally be waiting another six months easily as they take forever to do nothing. so see if you can get a part time job at xmas (but give the P45 instead of signing a P38(s)) or easter
    And that is precisely what happened

    Cheers again uni

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