My employee has another job elsewhere, and is having 20% tax deducted from their pay from me. Is this correct?
In short, yes. If your employee has a job elsewhere, and has completed a HMRC New Starter Checklist ticking box C that says ‘As well as my new job, I have another job or receive a State or Occupational Pension.’ they should be allocated a tax code that deducts 20% for all their earnings with you.
Initially their second job tax code that should be used is BR.
It may be that your employee earns below the non-taxable allowance in their other job (£11,000.00 for 2016-17), and should have a different tax code. However, until payroll is advised of this by HMRC they will remain on the tax code that takes 20% of everything they earn.
If their other job pays more than the non-taxable allowance, it is likely that they will remain on the 20% tax code for their time with you, as they are using all of their non-taxable allowance in their other job, however they may receive a tax code specific to their circumstances if they ear below their non-taxable allowance.
Any changes to the tax code must be received officially from HMRC, either in writing to the employee or the employer or payroll agent, or electronically, directly to payroll from the HMRC gateway. Changes should not be made on ‘hearsay’ or calculated by the employer.
More information about tax codes and their meaning can be found on the Gov.org website here:
https://www.gov.uk/tax-codes/letters-in-your-tax-code-what-they-mean
If you have any questions on tax codes PayrollAbility would be happy to hear from you. Call the office today for a chat.
