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JeanetteLeisegang
April 28, 2020
Solved

PAYE not being deducted from Employee

  • April 28, 2020
  • 1 reply
  • 0 views

Hi

Our employee joined in November last year tax code 1250L cumulative, now it's my understanding that QB allows pay to accumulate until it reaches 12 500 (Taxable allowance) and when income exceeds this then QB starts deducting tax and then tax is deducted monthly until the end of the tax year in March 2021.

 

Is the tax free allowance given upfront until its exceeded or is it split evenly over the year?

 

Jeanette

Best answer by Ashleigh1

Hi Ashleigh1

 

I do not have employment allowance on.  And it is set to cumulative.  When I run the P32 report I can see income tax being deducted.  

 

Gross pay to date is £3,076.  Monthly gross pay £1,538.  So far £230.40 has been calculated as income tax. 


Hello Jeremy008 

 

So the tax will be calculating at 20% of anything over the1042 per month. The system calculates and will alter depending on the earnings for that month. 

 

So the system will be working it out correctly for you as it works it out as a monthly basis and unless you are the company director this will calculate correctly in the system.  Only a company director pays NI when it hits the threshold. 

 

 

 

1 reply

P
pete20
April 28, 2020

The allowances cover the tax year eg Apil 6 to April 5 each year

 

J
JeanetteLeisegangAuthor
April 28, 2020

Hi Pete

I understand that the allowances cover the tax year, what I am asking is :

If the allowance is £12500 for the tax year in question

 

Does QB deduct no tax until the allowance is reached ie from April to whenever the £12500 allowance is reached the system won't deduct tax, and then when the £12500 is exceeded then tax is charged

 

OR

 

Does  the system split the £12500 over the tax year so that 1041.67 of the monthly salary isn't taxed and the balance is

JasroV
JasroV
April 28, 2020

You got it right, @JeanetteLeisegang.

 

QuickBooks will tax the allowance if it exceeds the £12500 amount. And yes, the amount will be split. It is given in equal portion through the year. This way, your employee will receive the full allowance by the end of the tax year.

 

Furthermore, here are some great articles you can read to learn more bout payroll tax year changes in QuickBooks Desktop (QBDT):

  1. Payroll Tax Year Changes 2019/2020
  2. Preparing and running payroll year end 2019/20 for QuickBooks Desktop.

Let me know if there's anything else I can help you with. I'm always a post away. Have a wonderful day and keep safe!

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