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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5029
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi, We are a small company and just hired an intern for

Resolved Question:

Hi,
We are a small company and just hired an intern for one month, We will be paying her £1000 per month for nearly 38 hours in a week @ £6.50 NMW. Its her first job and we are worried whether we will be paying any personal tax over and above anything £10000 personal tax allowance @ 20% for her and national insurance contribution for any earning over £153 @ 12%.
Please guide us accordingly for what we are responsible.
Regards.
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

First of all, income tax is payable by the person who earns taxable income.
You would have to operate her salary on PAYE and deduct NI and tax on that earning. This would be passed over to HMRC under RTI (real time information).

You as an employer are responsible for the correct operation of PAYE system, deductions and payments to HMRC.

You will not be paying any personal tax out of your pocket.

I hope this is helpful and answers your question.
Customer: replied 3 years ago.

Thanks for your reply, If this is her first job since April 2014, and she will only get £1000 in a month, Does she not have allowance of £9000 still to reach to that level where her income would become taxable?

National insurance is definitely something that we will deduct and pay.

Expert:  taxadvisor.uk replied 3 years ago.
Domenico, thank you for your reply...

If she is given a normal tax code of 1000L when you set her as an employee, then she would have enough tax free allowance to dat that her salary of £1,000 would not attract and income tax.

If on the otherhand, she is given an emergency code of 1000L M1 then each month is treated separately and her tax free free is each month on its own as opposed to aggregation of tax free pay. In this case some income tax would be payable and she would have to sort out tax affairs with HMRC at the end of tax year.

More information on emergency tax code here

https://www.gov.uk/emergency-tax-code



I hope this is helpful.
Customer: replied 3 years ago.

We are not even PAYE registered company because we don't pay salaries as we are Government funded, this would be the first time where we will be paying to intern for one month only.

Correct me if I am wrong:

First step: We would first have to register this company with PAYE and providing them only with intern detail who will be paid; I think it can be done online.

Second step: Asking HMRC to give tax code to such intern;

Third step: when paying salary of £1000 after a month, intimating HMRC that we have paid this much amount to this person.

Am I right?

Thanks for your cooperation; your service has been great

Expert:  taxadvisor.uk replied 3 years ago.

Domenico, thanks for your reply.

You are correct in your steps.

Please use this link for more information on how to register as employer, adding employees and payments to HMRC etc

https://www.gov.uk/business-tax/paye

I hope this is helpful.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 3 years ago.
I thank you for accepting my answer.

Best wishes.
Customer: replied 3 years ago.

Another question regarding the same topic: We have registered us with PAYE and asked an intern for her tax code.

Now, at the time of her pay, We will just deduct any national insurance on behalf of her from her gross pay £1000 and pay the net to her after deduction and we will not deduct any tax because its her first job during this tax year. We will update the real time information in PAYE and retain the NI deductions to submit it to HMRC on or before 5th April 2015, Am I right?

Another question is about Employer's national insurance contribution for employee, the rate of which is 13.8% for year 2014/15. what is that and do we have to pay that as well?

Expert:  taxadvisor.uk replied 3 years ago.
Domenico, thank you for your reply.

If you get a tax code 1000L then there will be no tax deductible and only employee NI.
As far as employer NI is concerned, the Goverment has given an allowance of up to £2,000 against employer NI for this tax year.

More information on this here

https://www.gov.uk/claim-employment-allowance


I hope this is helpful.
Customer: replied 3 years ago.

Thanks very much and when we will pay NI to HMRC, the day when we deduct NI amount from an intern salary or hold it till 5th April ? You have so far given best service.

Expert:  taxadvisor.uk replied 3 years ago.
Domenico, ideally you should pay by the 19th of each month.. eg. Oct 2014 deductions by 19 Nov 2014.

I hope this is helpful.