Businesses, Tax Year & Employee Pay

MadMan-JaMeS · 8 Mar 2011 at 20:12

Hey,

Just looking for some advice and info.

Our company has told some of us that we will be getting paid a week late next time we are paid.

We get paid four weekly and our next pay date should be 25th March but they have said we will get payed on 1st April.

What does the company gain from this ? and can they do it ?

Also legally where do i stand ?

Participant · 8 Mar 2011 at 20:15

They used to pay you a week in advance and no longer wish to do so.

Neither you nor they gain anything but for stopping people bunking off on the 25th.

Legally you're peeing into the wind.

Xelene · 8 Mar 2011 at 20:17

Read your contract, they may be in breach. You will be able to quit your job without the usual notice period if they are. Might be the accountants / bookkeepers are just busy at end of tax year, might be there's cashflow issues.

[TW]Fox · 8 Mar 2011 at 20:18

It's 6 days? Is it worth making waves over? Its hardly a huge deal is it?

The only thing I'd want to find out is why - if they are in financially difficulties maybe its time to move on.

Kemik · 8 Mar 2011 at 20:20

Cash flow? No idea.

MadMan-JaMeS · 8 Mar 2011 at 20:20

Robbie G said:
They used to pay you a week in advance and no longer wish to do so.

Neither you nor they gain anything but for stopping people bunking off on the 25th.

Legally you're peeing into the wind.

Nobody here bunks off on paydays anyways and they don't pay us a week in advance, our pay period stops on the sunday before the 25th.

So we get paid from 21st Feb - 20th March on 25th March or atleast we should.

Raptor · 8 Mar 2011 at 20:20

Does seem a bit strange as you are paid 4 weekly.

MadMan-JaMeS · 8 Mar 2011 at 20:21

[TW]Fox;18628228 said:
It's 6 days? Is it worth making waves over? Its hardly a huge deal is it?

The only thing I'd want to find out is why - if they are in financially difficulties maybe its time to move on.

I have bills to pay, so yeah it is a big deal to me, and most the people here, we don't earn huge amounts.

Nitefly · 8 Mar 2011 at 20:22

If their tax year starts on 1st April is sounds like they are trying to reduce their corporation tax for this period. It might mean something, it might mean nothing depending on what else is going on.

UK-AL05 · 8 Mar 2011 at 20:23

MadMan-JaMeS said:
Hey,

Just looking for some advice and info.

Our company has told some of us that we will be getting paid a week late next time we are paid.

We get paid four weekly and our next pay date should be 25th March but they have said we will get payed on 1st April.

What does the company gain from this ? and can they do it ?

Also legally where do i stand ?

This most likely to do with cash flow. Doesn't necessarily mean there not profitable, just means incoming payments, outgoing payments are in a awkward sync.

Participant · 8 Mar 2011 at 20:27

MadMan-JaMeS said:
Nobody here bunks off on paydays anyways and they don't pay us a week in advance, our pay period stops on the sunday before the 25th.

So we get paid from 21st Feb - 20th March on 25th March or atleast we should.

I meant that some companies that pay in advance have problems with people resigning, getting paid some in advance, then leaving as soon as they're paid.

If your pay period ends 20th (bit weird as it's a slight PITA to account for PAYE etc. come April payrises, when the inflation busting payrises might kick in) then I don't personally know how far past your pay period they can legally defer your salary.

Nothing to do with corp. tax as Nitefly suggests, as cash flow does not determine tax liability. They'd accrue whatever they hadn't paid as at the end of the financial year.

alx · 8 Mar 2011 at 20:27

Nitefly said:
If their tax year starts on 1st April is sounds like they are trying to reduce their corporation tax for this period. It might mean something, it might mean nothing depending on what else is going on.

Could just be this.

I can understand how it's a pain, but being paid 6 days late shouldn't be the end of world as problems like this do sometimes happen unfortunately.

Participant · 8 Mar 2011 at 20:38

alx said:
Could just be this.

No, it could not be.

You cannot defer corporation tax just by changing a payment date.

Otherwise someone receiving a million pound's worth of stock on the 31st March, could increase their profit by £1m just by paying for it on the 1st April.

Nitefly · 8 Mar 2011 at 20:40

Robbie G said:
No, it could not be.

You cannot defer corporation tax just by changing a payment date.

Otherwise someone receiving a million pound's worth of stock on the 31st March, could increase their profit by £1m just by paying for it on the 1st April.

Wouldn't it stagger the overall payments differently if the company had total profits £1.5mill+?

Plus in your example profits next year would be £1m down, swings and roundabouts, surely?

Dark88 · 8 Mar 2011 at 20:45

Nitefly said:
Wouldn't it stagger the overall payments differently if the company had total profits £1.5mill+?

Plus in your example profits next year would be £1m down, swings and roundabouts, surely?

You account for things on the accruals concept, i.e when the expense is incurred, not when the cash is actually paid over.
i.e. if you pay your utilities on a quarterly basis and your year ends half way through a quarter, you'd accrue the expense for the amount of months through that quarter.

Your tax would then be calcd based on your accounts.

Nitefly · 8 Mar 2011 at 20:47

Dark88 said:
You account for things on the accruals concept, i.e when the expense is incurred, not when the cash is actually paid over.

Your tax would then be calcd based on your accounts.

That makes sense

daver · 8 Mar 2011 at 20:48

Can't remember the timings of NIC & Tax payments employers have to make to HMRC but it could be something to do with that

Participant · 8 Mar 2011 at 20:49

Nitefly said:
Wouldn't it stagger the overall payments differently if the company had total profits £1.5mill+?

Nope. Corporation tax is +/- 28% of pre-tax profit. The point is that you cannot change this pre-tax profit figure, just by changing the date you pay your employers. So no, it wouldn't (or shouldn't) change your cash flow situation.

For example, if you chose to pay your employers one year after the corresponding salary period, you'd be accruing that salary in your accounts for a year. Therefore your profit would include the cost, whether you've paid it or not.

Nitefly said:
Plus in your example profits next year would be £1m down, swings and roundabouts, surely?

Trying telling HMRC that you wish you defer the corporation tax you owe them by six months...and that it's fine as it's just swings and roundabouts

.

28% of your profit is worth more to them now, than whenever you decide you feel like paying it x months down the line

.

Pudney · 8 Mar 2011 at 20:53

Robbie G said:
For example, if you chose to pay your employers one year after the corresponding salary period, you'd be accruing that salary in your accounts for a year. Therefore your profit would include the cost, whether you've paid it or not.

No it wouldn't

Participant · 8 Mar 2011 at 20:53

Pudney@work said:
No it wouldn't

Yes it would?