Why someone may not be paying tax
If one of your employees isn't paying tax, it's likely because this is their first job within the tax year and they're starting employment part-way into the tax year. They've built up a cumulative tax allowance which is more than what they earned in their current employment.
The employee carries their unused tax-free allowance into the next period and continues to accumulate until they've used up all their allowance. They only begin to pay tax once their taxable pay to date is more than the cumulative allowance.
Check the employee's tax code
You can check that the employee has the correct tax code on their tax code notice, also called a P6 form. You should also check any notifications from HMRC. To view the employee’s tax code, follow the steps below:
📌 Note: If the employee is on a 0T (Zero T) tax code, this means they don't pay tax.
Click Workers, then click Movements.
Click PAYE Form Enquiry.
Search for the worker in the worker field, then press Tab.
Double-click the form P6.
You can now view:
The worker's new tax code.
The worker's taxable pay to date.
📌 Note: If the taxable pay to date is zero, the employee has only started earning in their employment with you. If you believe this is incorrect, you must contact HMRC and discuss this further.
Check the tax calculation
To confirm that the calculation of tax is correct, you can use HMRC’s PAYE tax calculator.