Tax rebates and new employees

[Andy Collins]

This topic came up in the pub the other night. A new employee was entitled to a large tax rebate, which their new employer was expected to pay out. This must be a headache to sort out, esp if your business is struggling in the winter months. This HM Revenue & Customs: Claim funding for a tax refund for your employees should help advise you if you find yourself in this position.

With many being laid off all over the country, I suspect rebates are going to be a big thing to consider if you want to take on new staff.

[Rupe]

It should all work out ok though. The tax code system does work. I can't remember how rebates work exactly and I think it depends on the amount, so large amounts are paid directly from IR to the employee, but smaller amounts are effectivley re claimed by less tax being taken on future pay.

 

So a person employed for 4 months pays tax is if its going to be like that all year. His employer pays 400 per week less tax person, takes home 300 (this is just example figures) and IR get 100.

 

After 4 months person is laid off and has no more work until late in the tax year with a new employer. At this point he is owed say 400 back again! So his pay is now 400per week less no tax until its all balanced again.

 

So the new employer is not paying any more overall. Still the weekly wage, but the employee is gettign his rebate in the form of less tax being taken.

[Stephen Blair]

it does work out over time, BUT the employer has to stump up the money on the first week, its a pita. I have had to do it a few times. not cool:thumbdown:and all that happens is the lad gets excited and blows his extra £400 in the first weekend, can't be bothered working then goes in the huff when its back to basics:sneaky2:

Edited February 23, 2010 by Stephen Blair

[Rupe]

So the employer has to actually pay more than the weekly wage? I thought it would just be no tax deducted until its balanced??

 

Surely the employer can give it in small doses to the employee? So lets say wages are 400 and the tax thing says give him another 400. Employer gives him 450 for 8 weeks and tells him to like it or get another job??

 

Surely you can't be made to pay a new employee the rebate in full at the start of employment? You would just choose a different employee and those who are due a rebate would find it harder to get work!! No?

[Stephen Blair]

my first employee was on £150 a week 9 years ago, i had to pay him an additional £450 his first week. I had to do it with another lad i took on before chrimbo, about £400. Guess what? No more employees for me.

[Rupe]

ANd then it come back out of there tax from then on? So you pay (from my first example) 400 less 100 tax but don't give that tax to the IR cos you have laready paid out??

 

Is that it? It still sucks! You'd be inclined to sack them and get someone else. They would have only just started when yuou find out you owe them this money, so you could let them go. "sorry mate, its not working out, bye" Next?

[Stephen Blair]

the first lad left me in the lurch on a monday morning, knowing full well i had a big roadside conny hedge to do, no phone call, not answering mine, to think i was actually worried about him, then i drive back through town and here he is in full working gear with someone else, his face dropped, i pulled over and he murmered some load of bull, and that was it. I was disgusted with him tbh, he came asking me for a job, it was my first ever full time employee when i was 24, stress like that you dont need. Guess what, nearly 10 years on and he cant do anything more than dig holes, oh and he has had about 20 jobs since and is un employed again, he asked me for a job again a few years back in the pub,' just give me a shout big man' oh how i laughed.

[Hodge]

the first lad left me in the lurch on a monday morning, knowing full well i had a big roadside conny hedge to do, no phone call, not answering mine, to think i was actually worried about him, then i drive back through town and here he is in full working gear with someone else, his face dropped, i pulled over and he murmered some load of bull, and that was it. I was disgusted with him tbh, he came asking me for a job, it was my first ever full time employee when i was 24, stress like that you dont need. Guess what, nearly 10 years on and he cant do anything more than dig holes, oh and he has had about 20 jobs since and is un employed again, he asked me for a job again a few years back in the pub,' just give me a shout big man' oh how i laughed.

 

I have had a simillar experience stevie, they think you need them to work for you, wa****s.

[Al Cormack]

The link in Andy's post says how to do it.

Just deduct the refund amount from your payment to HMRC for the NI and PAYE tax.

If you don't pay enough to HMRC in one month, then spread it over 2 or 3. As long as it is all balanced by the end of March then no probs.