OT Income tax help

happypig · Jan 27, 2017

Wonder if anyone is in the know about tax/payroll.
My boy is 20 & has been working for a fast food outfit for a few months. He does about 16-20 hours a week for £5.60 an hour.
He's never had a payslip, just gets paid cash for the hours he works (in the summer they went to Hong Kong for 3 weeks and he had no wages) .
He's now got offered a "proper" job at a decent firm but his employer is being a bit evasive about giving him a P45.

What happens if they flat refuse to give him one ?

Eeyore · Jan 27, 2017

Bad luck on his former employer.

There is a form that his new employer can give him to fill out and he will be able to get a tax code. He is unlikely to have a liability to pay anything outstanding at that rate.

However, it would serve him well to examine his previous contract (if there was one) to ensure that he wasn't actually self employed.

The tax office are actually quite helpful on these matters.

Cheshire Cat · Jan 27, 2017

Paid in cash? He probably never paid any tax (PAYE), doesn't have a contract and wasn't actually "employed". The "employer" sounds distinctly dubious.

B-right-on · Jan 27, 2017

Obviously its a 'cash under the counter' type of job and not been declared by the shop owner. A P45 stated what tax has been paid. So if they havent been deducing tax and havent declarted him an employee, then they aren't going to issue one. If you got shirty, they could say that he is 'self employed' and not an employee of the food shop outlet etc.. and that puts him responsible for declaring the income and filling in a self assessment. As the tax year ends pretty soon (5 April) then its unlikely he is going to be due to pay any income tax on any money he earns between now and April as he would have earned less than £2k so far based on the pay/hours/time you said above. The Allowance for this tax year is £11k before any tax is due which means he would need to earn circa £4k in Feb and £4k in March to start to be in the income tax bracket. Nat Ins is a different thing though.

Assuming you dont get one, which seems unlikely, I guess your 3 choices are to call the the IR. Depends on how much trouble you want to kick up, but talking to them could start an investigation into the fast food outlet. Or you could just fill it in as self employed on a Self Assessment form on line. What you shouldn't really do (

) is to say that no tax is due and therefore keep your head down.

happypig · Jan 27, 2017

Thanks for the advice. There's certainly no question of "keeping his head down", I've always believed one should pay one's taxes.
The only problem he may have is that he's not kept a record of how much he's been paid, it probably averages about £105 a week for 35 weeks so around 3.5-4k.

Justice · Jan 27, 2017

happypig said:
Thanks for the advice. There's certainly no question of "keeping his head down", I've always believed one should pay one's taxes.
The only problem he may have is that he's not kept a record of how much he's been paid, it probably averages about £105 a week for 35 weeks so around 3.5-4k.

Dont you have to earn over 11k these days before you pay tax?

happypig · Jan 27, 2017

Justice said:
Dont you have to earn over 11k these days before you pay tax?

I beleive so. It's the lack of P45 I was more concerned about

mothy · Jan 27, 2017

I wouldn't panic. He's not self employed. It's up to his boss to deduct & pay over his tax & ni.

I would keep quiet about this one off & start new job as though he's never had one - unless you demand him to do the honest thing - in which case he'll likely get hit with a tax bill if his employer says he was self employed..

Swillis · Jan 27, 2017

The shop owner cannot say he has been self employed, as the rules on that are pretty clear. It's obvious that he was not self employed.
He would not have been liable for any tax at that rate anyway as far as I'm aware. The employer is legally obliged to provide a P45. Though to be honest it is pretty obvious he was working cash in hand, did he not think the lack of a proper payslip was a sign. It could turn out a bit messy for the employer to be honest, which is silly as I don't think he would be liable for much, if anything.

Swillis · Jan 27, 2017

This is a tool provided by hmrc to determine if you are employed or self employed, there is no way on earth the employer could claim he was self employed

http://tools.hmrc.gov.uk/esi/invest...erviews_screens_xint$global$global?user=guest

Springal · Jan 27, 2017

I'd keep schtum and tell his new employer he hasn't had a job. For what little he has earnt it's not worth bothering with.

nwgull · Jan 27, 2017

happypig said:
I beleive so. It's the lack of P45 I was more concerned about

He's certainly not been avoiding paying tax or NI; he hasn't earned enough in this tax year. However, this 3.5K he's earned has to be taken into account when calculating whether or not he'd be due to pay any tax on the money he's going to earn between now and April - tax threshold for 16/17 would be 11k, NI threshold is 8K.

His new employer will also be due to pay NI on earnings over about £8.1K, which is why they'll want a P45 to be certain that they're paying their dues.

Worth contacting his previous employer to ask if they can contact HMRC to declare his earnings for this year, and a P45 can be sorted. You could even contact them yourself; I've usually found them very helpful.

It's odd that his previous employer didn't declare his wage though, as this reduces his corporation tax.

Justice · Jan 27, 2017

happypig said:
I beleive so. It's the lack of P45 I was more concerned about

If he wasn't getting payslips I doubt he will get a p45 tbh.

GoldWithFalmer · Jan 27, 2017

Is this a reputable fast food outlet or a sole trade slum street type outlet?

McTavish · Jan 27, 2017

nwgull said:
It's odd that his previous employer didn't declare his wage though, as this reduces his corporation tax.

But also reduces the need to pay employer's NI contribution, the need to pay sick pay and holiday pay (as already mentioned) and potentially all sorts of other things. If the business was being run at a "loss" then tax doesn't really come in to it.

happypig · Jan 27, 2017

GoldWithFalmer said:
Is this a reputable fast food outlet or a sole trade slum street type outlet?

Decent plaice, a long established Fish & Chip shop. He's not sure if the people who run it are actually the owners or just managers but it's them who employed him. They are Chinese/Malaysian.

GoldWithFalmer · Jan 27, 2017

happypig said:
Decent plaice, a long established Fish & Chip shop. He's not sure if the people who run it are actually the owners or just managers but it's them who employed him. They are Chinese/Malaysian.

then forget it and move on.....is what i would do..

beorhthelm · Jan 27, 2017

paid cash, no payslip... the job never happened officially.

Beach Hut · Jan 27, 2017

beorhthelm said:
paid cash, no payslip... the job never happened officially.

Think the technical term is the black economy

Normski1989 · Jan 27, 2017

He has nothing to worry about. He wasn't due to pay tax or NI, and unless he's on a huge salary now, he won't reach the tax threshold by the end of the tax year.

Yes, it sounds like his employer wasn't doing things above board, but that'll be their problem if it ever gets looked into.

It's not worth worrying about.

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OT Income tax help

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