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Old 06.05.2015, 17:57
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First payroll is for 1,5 months: will I have problems?

Hi all

A friend started mid month and just missed the payroll for April, so will get 1,5 salaries on May.

Does the Tax office look at the first salary and assume this is what you will be on for the whole year (times 12 for annual salary)?

I am asking because my friend is paying at source and is barely under 120k annually.If they think this is his normal monthly wage then the 120k limit will be reached as far as they are concerned and tax returns will be needed/extra trouble for nothing etc

Any ideas if first month is not that relevant? Maybe they look at year end and only then decide if you need tax return?
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Old 06.05.2015, 18:15
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Re: First payroll is for 1,5 months: will I have problems?

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Hi all

A friend started mid month and just missed the payroll for April, so will get 1,5 salaries on May.

Does the Tax office look at the first salary and assume this is what you will be on for the whole year (times 12 for annual salary)?

I am asking because my friend is paying at source and is barely under 120k annually.If they think this is his normal monthly wage then the 120k limit will be reached as far as they are concerned and tax returns will be needed/extra trouble for nothing etc

Any ideas if first month is not that relevant? Maybe they look at year end and only then decide if you need tax return?
PAYE tax (Quellensteur) is deducted monthly and the rate is based only on that one month's earnings, so the rest of the year is not relevant. And Yes, the 120k limit is based only on the total earnings for a year, so a tax return won't be required for the first year if your friend only works for 7 months on that rate anyway.

Large variability of pay and deductions from one month to the next, which is quite common for many contractors, can lead to a situation where more tax has been paid in the monthly deductions than would be if a tax return was made, so it _may_ be worthwhile doing so anyway.

EDIT: I'm no expert, so don't quote me. Others with more knowledge than I will be along shortly, I'm sure ;-)
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Old 06.05.2015, 18:22
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Re: First payroll is for 1,5 months: will I have problems?

Thanks Ace, so does that mean that she will pay more tax this month than what she would have paid if she had received her April and May salaries separately?

And I am guessing there's no way to get it back if every month is taxed separately. In the Uk you had an allowance and if you overpaid one month the next would be slightly better off but doesn't sound like that's the case here.

P.S Does that mean that you're screwed if you get a big bonus+salary once a year? Tax rate must be 2x as bad.
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Old 06.05.2015, 18:26
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Re: First payroll is for 1,5 months: will I have problems?

Depending on what she effectively earns in these months, she might have to do a tax income return. The tax authorities calculate as if she had earned the full year and then she may be over the magic 126k CHF.
If you search on the forum, someone has explained it much better than I do now. My experience is that when I started in June, I still had to do a tax declaration even when the amount for those 7 months was below 120 k.
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Old 06.05.2015, 19:00
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Re: First payroll is for 1,5 months: will I have problems?

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Thanks Ace, so does that mean that she will pay more tax this month than what she would have paid if she had received her April and May salaries separately?
That was my experience the first year I was here. One month I did about 60 hours, short month with holidays and stuff, and that was taxed at around 5%; the next I did around 200 and the rate was set at 29%.

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And I am guessing there's no way to get it back if every month is taxed separately. In the Uk you had an allowance and if you overpaid one month the next would be slightly better off but doesn't sound like that's the case here.
I my limited experience they don't take this into account, but it may vary. In the UK you have to do the tax return anyway, so resolving any outstanding discrepancies would depend on that, just like even monthly differences would here.
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Old 06.05.2015, 19:58
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Re: First payroll is for 1,5 months: will I have problems?

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Thanks Ace, so does that mean that she will pay more tax this month than what she would have paid if she had received her April and May salaries separately?
Yup. They'll calculate that paycheck's tax rate based on an extrapolation - e.g. if she got paid that every month, what income bracket would that put her in?

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And I am guessing there's no way to get it back if every month is taxed separately. In the Uk you had an allowance and if you overpaid one month the next would be slightly better off but doesn't sound like that's the case here.
Sure there is. File a tax return. It's optional under 120k, but doable. Just be aware that it may or may not work in your favor.

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P.S Does that mean that you're screwed if you get a big bonus+salary once a year? Tax rate must be 2x as bad.
Yup, tax rate was definitely worse (back when I was on the B permit). But I filed my return and got it back, so no big deal.
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Old 06.05.2015, 20:04
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Re: First payroll is for 1,5 months: will I have problems?

Amazing replies everyone, thank you!

My only concern is that when you pay at source they assume some generous deductions on your behalf for travel, lunch etc and if she were to file a tax return I am sure she would end up paying more tax at the end anyway.

Thanks for all the info! Love this forum!
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Old 06.05.2015, 21:23
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Re: First payroll is for 1,5 months: will I have problems?

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... In the UK you have to do the tax return anyway...
That part is clearly incorrect. About half of the UK employees for whom we file P60s are not required to complete self-assessment forms SA-100. Those who are sent notices to file have to do so because they have substantial non-salary income not subject to withholding, such as rental property.

The answer may be different for the highly-paid. My office doesn't handle payroll for any such. For those with average savings and investment income, alimony, etc. HMRC computes an appropriate tax code which we put into the PAYE software.

A tax declaration needs to be filed to get a refund if there has been excessive withholding: for example a pension liquidation or tax withheld on interest when the taxpayer is below the tax threshold.
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Old 06.05.2015, 21:48
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Re: First payroll is for 1,5 months: will I have problems?

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Thanks Ace, so does that mean that she will pay more tax this month than what she would have paid if she had received her April and May salaries separately?

And I am guessing there's no way to get it back if every month is taxed separately. In the Uk you had an allowance and if you overpaid one month the next would be slightly better off but doesn't sound like that's the case here.

P.S Does that mean that you're screwed if you get a big bonus+salary once a year? Tax rate must be 2x as bad.
Yes, you are right. I get taxed twice the amount in December (my pay is more than 10k gross then because of the 13th month) I never get it back.
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Old 06.05.2015, 22:18
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Re: First payroll is for 1,5 months: will I have problems?

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That part is clearly incorrect. About half of the UK employees for whom we file P60s are not required to complete self-assessment forms SA-100. Those who are sent notices to file have to do so because they have substantial non-salary income not subject to withholding, such as rental property.
The UK tax return is being abolished from 2016 for the self employed & 2020 for everyone.
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Old 07.05.2015, 10:16
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Re: First payroll is for 1,5 months: will I have problems?

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The UK tax return is being abolished from 2016 for the self employed & 2020 for everyone.
What?
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Old 07.05.2015, 10:23
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Re: First payroll is for 1,5 months: will I have problems?

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And I am guessing there's no way to get it back if every month is taxed separately. In the Uk you had an allowance and if you overpaid one month the next would be slightly better off but doesn't sound like that's the case here.
No that is also the case here, the company should adjust to ensure the correct amount of tax is paid overall.

I've had payslips that ran to double the usual length with adjustments for allowances, pension payments and related tax bits of previous months.
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Old 19.09.2015, 01:18
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Re: First payroll is for 1,5 months: will I have problems?

Just as a reply to what happened, my friend actually got 1.5 salaries and got taxed at a much higher tax rate. As expected.

All good from next month onwards.
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