If you work for a company that outsources it’s payroll services to a third party then we have some tips to ensure that you do not overpay tax and that you are put on the right tax code.
Payroll Services and Wrong Tax Codes
When you finish working with an employer you should be given a P45. If you are working for a small business that uses an external company to do its payroll you should ensure that they provide you with a P45 as soon as possible. If you can find out the name of the payroll company you may be able to contact them directly to avoid going through your employer.
The reason you need to get your P45 as soon as possible is because when you start a new job you need to give your new company your P45 so that they know what tax code to put you on. If you are unable to give the payroll department the P45 they will have no choice to put you on an emergency tax code which will often result in you overpaying tax.
Checking Your P60
At the end of the tax year the company that your employers uses to for their payroll service should provide you with a P60. This will show how much tax you have paid and how much you have earned during the year. You should check to ensure that the income corresponds with your monthly pay cheques. There is likely to be a YTD (year to date) figures on your pay cheque, this amount for tax and income should be similar to your P60. Sometimes mistakes can happen and it is best to ensure that the payroll company has performed it’s job correctly and has the correct information for you.
Often when you outsource services away from your business, the increase in the degrees of separation can cause increases in errors as well as time delays. It is important that you check to see that you are paying the right amount of tax and ensure that you claim back any that you might be due.