How do they figures for a tax rebate??

Question

Hi

I filled in my P91 and i sent it back. Ive been told by my new employer that i will get some form of rebate.

But how do they work it out??

I left my previous job at the start of october, became self employed until Jan and then started this one at the end of feb.

it would be nice how they work it out and get a rough figure on what i could get back from them ( i will cherish the moment forever!!!)

Regards

Richard

Answer 1

Your current employer cannot be certain that you will receive a tax rebate, unless, as stated above, they are unaware of your period of self employment.

When you commenced self-employment, your P45 should have been submitted to the Inland Revenue.

When you commenced your new employment, you would not have a P45, and therefore a P46 should have been completed, which will in most cases, give you an emergency tax code.

Your earnings from employment and profits from your self-employment from 6th April 2006 to 5th April 2007 (a UK fiscal year) will be added together, along with any other income you have received in the period, if any.

Your tax will be calculated of your total income for the fiscal year, along with any class 4 National Insurance.

This will give you the total amount due for the year.

Any tax you have paid via your employment for that period will be deducted from that figure.

You will then be left with either:

1) A tax bill which will be due by 31st January 2008

or

2) A tax refund, which you can claim on your 2007 tax return.

You cannot possibally know your total tax liability or refund until after 5th April 2007.

If you submit your 2007 tax return before 30th September 2007, the Inland Revenue will calculate your liability or refund for you.

Answer 2

Have they taken into consideration the time you were self employed? It doesn`t sound like it to me. If your new employer has an old code for you and thinks that you haven`t worked since you left your last `employed` job then this is the reason. When you are self employed the tax-system for you to pay tax is different from being employed. The Inland Revenue may work out the tax due for the self-employed time and send you a separate tax demand. Even so, you still wouldn`t be due for a rebate. Get in touch with the Inland Revenue and ask them to sort it for you. If your employer gives you a rebate, don`t spend it, because you will have to repay it.
PS Despite what the other answerer above has said, unless you earned peanuts when you were self-employed, you will not be due a rebate.

Answer 3

The Tax Office will have told your new employer what your pay and tax was up til you left work in October, plus the amount you earned self employed. Your employer uses the tax tables (or payroll software) to work out how much tax you should pay this month taking into account the previous details. I can't possibly go into detail about how its done on here, but its a very elegant and clever system which has been used since 1945. As you will not have used all your tax allowances from October until you started this job, a refund will arise.
Can't tell you how much the refund will be without knowing what figures the tax office has given your employer - ask him!
EDIT: I have assumed you didn't earn much as self employed, in view of the fact that you started and finished so quickly. In this case the Tax Office would include your slef employed earnings in the previous pay and tax figures which they have sent to your employer.

Answer 4

If you were registered as self employed you will receive a tax return to complete. Irrespective of the fact that you might now be in PAYE employment or retired you MUST complete that return. There are spaces in the return to tell the Revenue what your current circumstances are as of the end of the tax year 2006 -2007.

The answer that bacon left then becomes valid.

If your current employer gives you a rebate hang on to it until you receive your letter from the Revenue telling you what you owe for the tax year 2006 -2007.

Returns for this year 2006-2007 are not due until 31 Jan 2008, and the letters go out shortly after that date.

There are stringent penalties for not filing a tax return on time, and the interest is charged on any amounts due as from 31/01/08.