After the first week he told me that the rent is taken out before it goes to the HMRC so I don't have to get taxed on it. Probably because the accomodation isn't strictly legal. No council tax or anything. Just converted shed at back of the farm
Self-Employed or Employed
- Thread starter Shambala12
- Start date
Goweresque
Member
- Location
- North Wilts
In that case the employer may be correct. Code 1250L is cumulative, ie if you start partway through the year you will already have built up a tax free amount for the months you weren't working (ie April, May, June, part July). Given we are 7 months into the tax year your tax free allowance entitlement for 2019/20 so far is 7 months x £1042 = £7294 to the end of Oct 2019. So if your entire gross earnings so far this tax year are £6.7k, then you haven't used up all your tax free allowance yet.
You get another £1042 tax allowance each month, and if you earn another £1800 in November, the two figures above change to £8336 (allowance) and £8500 (earnings). I would therefore predict Novembers pay slip will show some small amount of income tax paid, about £30. The month after that should rise to about £150, assuming you earn another £1800 in December.
https://keyportfolio.co.com/tax-codes-made-easy/1250l
- Location
- South Wales UK
So accommodation is perk or benefit in kind?
Well it costs money so more of a nice little profit thing which benefits both me and the boss
I should get my November's pay slip within a few days so will find out then
Goweresque
Member
- Location
- North Wilts
That will be Octobers, surely? We've only just started November.
Yeah my bad ?
- Location
- South Wales UK
How long you been working there?
Goweresque
Member
- Location
- North Wilts
Given its tax evasion by both of you'd I wouldn't go advertising that on the internet........
Mid July
Fair point
Goweresque
Member
- Location
- North Wilts
Does the £6.7k you say you've earned so far include Octobers earnings?
Yes
Goweresque
Member
- Location
- North Wilts
Well in that case there shouldn't be any income tax taken off on your October payslip either, and you'll have to wait to the end of November to see whether some starts to come off then. But it won't be £500/month.......
- Location
- Lincolnshire
The OP isnt actually trying to evade tax, its the situation given to him, £400 is over the top however its stacked up
Goweresque
Member
- Location
- North Wilts
He is evading tax if his employer is taking his rent off the top of his earnings and declaring a lower figure to HMRC instead, which is what the OP has said is happening. Both are gaining - the OP should be paying 20% tax + NI on the £400/month and the employer should be paying tax on it as rent. Its not covered by the Rent a Room allowance as its a stand alone 'dwelling'.
Edit: plus of course the employer is evading employers NI contributions by artificially reducing the declared wage figure.
- Location
- South Wales UK
How do we know the employer is not declaring his cottage income?
Goweresque
Member
- Location
- North Wilts
Given he's evading employers NI to get it, plus is putting the employee up in a non legal dwelling, including not paying any council tax, I'd say its got to be pretty likely.
- Location
- Lincolnshire
Be wary this could all kick off and the OP could be jobless and homeless.
- Location
- South Wales UK
Slave labour next?