Monthly employee has a tax code change in wk 6?

pottoftea · PayPerShop Newbie Joined: 04 May 2008 Posts: 2

Hi, could anyone help please, if a monthly employee gets a tax code change in wk 6 when do you put the tax code change through? Would it be before running the month 2 payroll so weeks 5-8 would be effected? The 12Pay system I am using does not seem to allow a date of change to be entered.

Thanks in advance.

Trudy Smile

Ian Congreave

Welcome to the PayPerShop Forum and thank you for posting your question.

A coding notice has an "issue" date and an "effective" date. The dates are likely to be the same in the case of a P6 notice, which is a change of tax code during a tax year. In the case of a P9 notice, which is a change of tax code from the start of a new tax year, the "effective" date will be in the future, i.e. the 6 April at the start of the next tax year.

There is no reference, therefore, to a particular tax week and that is not how the tax code system works. You are required to apply the new tax code from the next payroll run which, in your case, will be the processing for month 2. Your reference to weeks 5-8 suggests a misunderstanding of the tax calculation process - monthly-paid employees only have tax months - tax weeks are not relevant.

However, if you apply the tax code on the coding notice from the next payroll run and it is a cumulative code (i.e. it is not followed by "M1"), it will apply retrospectively and it will be applied to all of the earnings so far in the tax year, including the earnings in month 1. If the new tax is higher than the previous one, a little of the tax deducted in month 1 will be repaid; if it is lower, some extra tax will be taken.

I'm not sure how clear that explanation is - the cumulative nature of the tax calculation is not easy to explain. If you are not quite clear, let us know - perhaps giving us the tax codes involved - and we will try to illustrate the effect.
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Dominic Buggy · Posted: Mon May 12, 2008 2:44 pm Post subject:

Hi,

I have recently received a P6b tax code notification dated 04/05/08 with an effective date of 18/05/2008 (wk 7), which is when the taxable pay thresholds change.

However, as your employee is monthly paid, and I am assuming it is at the end of the month, then merely apply the tax code as instructed.

If your Month 2 pay date is before the tax code effective date, then I would wait until after to operate.

Dominic

pottoftea · PayPerShop Newbie Joined: 04 May 2008 Posts: 2

Thank you both for answering it has helped loads.