Temping and Tax - Some common questions
What is my End of Year P60?
The HMRC form, P60,is issued to all employees at the end of the tax year. It summarises your earnings and tax deductions from your current employer during that year. You will only receive a P60 from your PRESENT employer and it will only show pay and tax from your employment with THEM.
Any earnings from previous employment during the tax year will have been shown on a form P45 which should have been issued upon leaving.
Where do I get my P60?
Your employer should send you one within a few weeks of the end of March. Anne Jagger Recruitment employees (including Temporary Workers) will find their P60 on-line with their payslips.
The new ‘Real Time Information’ system used by HMRC means that employers are obliged to provide weekly information about deductions made from employees. Because of this, there are now very few delays in allocating tax codes and processing payroll information. However, if you are currently temping for Anne Jagger and are concerned about your tax status please drop us an e-mail to firstname.lastname@example.org and put ‘TAX’ in the subject line. We will try to get back to you within 2 hours.
What is my Tax Code?
Your Tax Code is used to calculate how much of your annual earnings you will receive before being liable for Income Tax.
It is usually a number equal to 10% of your annual Tax Free allowance but with a letter ‘L’ after it. The most common Tax Code up until April 2014 was 944L which simply means that anyone with this tax code could earn £9,440 during the year without paying tax. From April 2014 this has increased to £10,000 so most tax codes are 1000L. (Trust HMRC to complicate stuff!)
So, how is my tax worked out?
The Pay As You Earn (PAYE) system, does it’s best to spread your tax payments over the year, so, rather than wait until you hit the ‘magic’ £10,000 figure and then tax you on all of your earnings after that, it assumes that you are going to earn roughly the same amount every pay day and works out what your tax will be at the end of the year.
Here is an example;
If your gross pay at the end of Week 1 is £300, the system assumes that you will earn £300 per week, every week for a year. i.e. £300 x 52 weeks = £15,600 for the year.
If your tax allowance is £10,000 (your tax code would be 1000L) you will be liable for tax on £5,600 at the end of the tax year.
20% of £5,600 is £1,120 so...
In order that you pay £1,120 during the year, the PAYE system deducts an equal amount every week, so, £1,120 / 52 weeks = £21.54.
This is fine if you work the same hours and earn the same amount every week but, for many people on temporary assignments, this amount changes frequently through the year.
This shouldn’t be a problem, the PAYE system keeps track of your earnings and deductions and makes adjustments each pay day.
If you spend some time not working, you may find that the taxman refunds you some overpaid tax one week.
However, if your earnings increase due to overtime or bonus payments, you may find your weekly tax increases too.
Don’t worry, these days employers and agencies like Anne Jagger Recruitment are required to submit up-to-date, electronic, information on all payments and deductions in ‘Real Time’ that is, very soon after we make your wage payments, so HMRC will have everything they need to ensure that your tax payments are correct.
If, for any reason, your code needs to change – either due to under or over payments in previous periods, or because of other personal circumstances – we will be informed by e-mail almost immediately.
If you are currently working in a Temporary Assignment for Anne Jagger London or Anne Jagger Witney and you believe that your tax code is incorrect, send an e-mail to email@example.com , put TAX in the subject line and let us know the problem. We can’t take calls direct but we will normally answer your query by e-mail within 2 hours.