Colleagues affected by underpayment of tax
Some colleagues have recently received a notice from HMRC, the tax office, to say they haven’t paid enough tax for the year ending 5th April 2013. Understandably this has caused some upset and confusion. If you are one of the colleagues to get a P800 Tax Calculation notice from the HMRC here’s what it means and how it affects you:
What has happened?
In the tax year ended 5th April 2013, because of the way the paydays fell, you were paid 14 times between 6th April 2012 and 5th April 2013 (the 2012/13 tax year) rather than the usual 13 times. This situation was unavoidable and for all companies who operate a four-weekly pay cycle occurs only once every twenty years. This affects both hourly paid and salaried colleagues.
Why does this result in the tax underpayment?
Each tax year you are able to earn a certain amount before you start to pay tax. This is called your personal allowance. Your personal allowance is divided by 13, so that you earn the same free of tax amount each pay period. Any pay in excess of the personal allowance is taxed.
In a year where there are 14 pay dates, HMRC advises employers to allocate an additional personal allowance on the 14th pay day. This avoids the whole of this 14th pay being subject to tax and your pay falling unexpectedly for that period.
However, this does mean that you may owe some tax for the year ended Friday 5th April 2013 as you have received more pay free of tax than the normal personal allowance.
How will HMRC contact you?
HMRC will normally notify you of any tax owing through a P800 Tax Calculation notification. This notification will include a calculation of your tax liability for the whole tax year. This figure is then compared to the amount of tax collected by Asda through the PAYE system to calculate the amount owed.
How will the underpayment be collected?
Any underpayment will usually be collected by HMRC through an amendment to your tax code; this means that for most colleagues it will be collected evenly during the tax year 6th April 2014 to 5th April 2015 through the Asda payroll. For a small number of colleagues this is not possible. Your P800 will advise this. If this is the case you will need to contact HMRC to discuss your own personal circumstances and options available.
We have been aware of this situation for a while and during the last twelve months we sought advice and explored the option of moving our pay day in April 2013. However this would have involved us delaying pay which would have caused more distress for colleagues with planned direct debits and standing orders.
If you have any further questions you can contact any of the following:
- Your People team in your Store/Depot
- The Reward and Recognition team on 0113 826 4900 option 4
- Because Asda does not hold HMRC’s data, we are not able to discuss your personal tax situation with you, but you can call HMRC directly on 0300 200 3300.
Any comments posted below will be passed to the relevant teams.