Income Tax - Assessment 1A -
1. To decide whether a person is classed as employed or self-employed, HMRC will apply tests to that person’s situation in order to make a decision. There are 7 main criteria for establishing a person’s situation: control, financial risk, equipment, work performance and correction, holidays, sickness and exclusivity.
Control establishes how much control the person who is paying for the work has over the person employed to do the work. In this case Katy completes small sub-contracts when she can. This indicates that Katy is self-employed as she is choosing when she wants to carry out jobs and does not have any deadlines.
Financial Risk establishes if a person can make losses as well as profits on work. In this …show more content…
DO is used if all of a person’s income is taxed at the higher rate tax (40%) and is often used if the person has more than one job.
OT is used if no allowances have been given or remain once adjustments have been made. The tax will be paid at the basic or higher rate, dependant on income.
There are a number of PAYE forms which include P2, P9D, P11, P11D, P60 and P45.
A P2 is a notice of coding which HMRC will send to the employer and employee.
A P9D is a return at the end of the year which shows the expenses and benefits of an employee who is lower-paid (less than £8500 PA). This form must be sent away to HMRC before 6th July and the employees will also be provided with copies before that date.
A P11 is a deductions working sheet. This form is provided by HMRC and the employer will have a different one for each of their employees. The form shows each employees gross pay which includes tax they have paid, statutory payments, National insurance contributions and pension contributions.
A P11D is a return at the end of the year which shows the expenses and benefits of an employee or director who earns over £8500 PA. Employers must send this form to HMRC by the 6th July and employees will be sent a copy by the same
1. To decide whether a person is classed as employed or self-employed, HMRC will apply tests to that person’s situation in order to make a decision. There are 7 main criteria for establishing a person’s situation: control, financial risk, equipment, work performance and correction, holidays, sickness and exclusivity.
Control establishes how much control the person who is paying for the work has over the person employed to do the work. In this case Katy completes small sub-contracts when she can. This indicates that Katy is self-employed as she is choosing when she wants to carry out jobs and does not have any deadlines.
Financial Risk establishes if a person can make losses as well as profits on work. In this …show more content…
DO is used if all of a person’s income is taxed at the higher rate tax (40%) and is often used if the person has more than one job.
OT is used if no allowances have been given or remain once adjustments have been made. The tax will be paid at the basic or higher rate, dependant on income.
There are a number of PAYE forms which include P2, P9D, P11, P11D, P60 and P45.
A P2 is a notice of coding which HMRC will send to the employer and employee.
A P9D is a return at the end of the year which shows the expenses and benefits of an employee who is lower-paid (less than £8500 PA). This form must be sent away to HMRC before 6th July and the employees will also be provided with copies before that date.
A P11 is a deductions working sheet. This form is provided by HMRC and the employer will have a different one for each of their employees. The form shows each employees gross pay which includes tax they have paid, statutory payments, National insurance contributions and pension contributions.
A P11D is a return at the end of the year which shows the expenses and benefits of an employee or director who earns over £8500 PA. Employers must send this form to HMRC by the 6th July and employees will be sent a copy by the same