Question archive: employment

Are there any other options available where an employee on PAYE is made redundant, or accepts voluntary redundancy, with a severance payment over the £30,000 tax threshold?

If the £30,000 exemption applies, then only the excess is included in gross pay, assuming the date of payment is on or before the last day of employment. If payment is made after the employee has left, PAYE (Code BR) must be applied to the excess over £30,000.

Unless you are totally confident that the exemption applies, I would seek confirmation from your Tax Office.

You need to make absolutely sure that the payment does in fact qualify for the £30,000 exemption, otherwise you could be liable for the PAYE if it does not, in fact, qualify.

Any taxable part of a termination payment is taxable in the tax year during which it is received (the rules changed for payments made after 5 April 1998). See Inland Revenue Manual SE13932 on their website www.inlandrevenue.gov.uk. An idea might, therefore, be to defer payment until the next tax year - the recipient's income may well have dropped into a lower tax band (i.e. from 40%) and, ultimately, he or she may escape a further higher rate tax charge on the payment.

Are you entitled to tax relief when paying back student loans?

No tax relief is allowed. However you don't get taxed on it either.

Can I check that my employer is using the right tax code for my salary?

Yes, you should receive a Notice of Coding statement (P2) from the Inland Revenue which will show your tax code for the year. This should agree with the code shown on your payslip.

I am a full time student. Iit was necessary for me to complete a years work experience as part of a sandwich course, where do I stand in regard to tax and can I claim any back?

Any earnings you would have received are taxable in the same way as if the work experience was a permanent job.

However, you are also entitled to personal tax-free allowances. If your income during the period of work experience was less than your personal allowances, or if you were on an emergency code, then it is likely that you have paid too much tax.

You should contact your Tax Office if you think you are due a refund.

I am a member of the Association of University Teachers. Do I have to apply for a tax code alteration reflecting the 'use of home as study'?

As an employee, to make a claim for the 'use of home as study' you would have to satisfy the Inland Revenue that this is 'wholly, exclusively and necessarily' in the course of your duties. This can be difficult to prove but it may be worth you writing to your local tax office asking if they will make an adjustment to your tax code.

If you were self-employed, it would be easier to make a claim for 'use of home as study'. This would be included on the self-employed pages of your self-assessment tax return form.

Don't forget that you can make a claim for professional subscriptions paid, for example to the NUT. These will be included in your tax code. If you have not made a claim for these you should send a copy of the subscription documents to your tax office. If you have the documentation to back up the subscriptions paid you can make a claim for payments made in the previous six tax years. Any repayment of tax will be made direct to you.

I am a nurse, recently I have taken up a post where no uniform is supplied but I am expected to wear my own smart clothing. Am I entitled to claim tax on this and if so how do I go about doing so?

Technically, No.

But you should check with your new employer/Tax Office to see if a local concession is in operation.

I am in full time employment and also receive a pension from a former employer. How can I be sure I'm paying the right amount of tax?

Your tax coding for the year (ie your personal allowance, reliefs and deductions) are probably set against your full time employment income. Your starting rate band and then your basic rate band are probably also set against your employment income.

The Inland Revenue will have told your pension company at what rate to tax your pension income. Depending on the level of your other income they may have advised that the tax should be deducted at 40%. If you telephone your local tax office, quoting your PAYE reference and/or National Insurance Number they will be able to tell you what they have advised.

At the end of the tax year (ie 5th April) you should combine these two sources of income with any other income you have, deduct your allowances and calculate your overall tax liability. This should then be compared with the tax deducted from all your sources of income.

I contracted out of SERPS into a non-contributory private pension, should my NI liability be less or does this only apply to those who contract out and into a company pension?

Only those employees who are in a company contracted out pension qualify for a reduction at source in the NIC paid. In your case if the contributions you make into your private pensions qualify as Approved Personal Pensions then the provider makes a request from the Inland Revenue Contributions Office for a sum of money the equivalent to the amount you would have paid into the SERPS element of your contributions. Your own contributions will remain as category 'A'.

I have a company van which I take home every day because I work from home and my head office is hundreds of mile away. In my tax code I have a deduction of £500 plus they also deduct £25 from my wages each month for private use of the van [which I do use].This £25 is taken out after deductions

Tell your Tax Office, and they'll reduce the £500 in your code.

The £500 is the taxable benefit for private use of the van. If you pay anything towards the private use, the £500 is reduced £ for £ by what you pay.

I have been told that if you are a full time student then you do not pay tax on earnings - is this correct?

No, it is not correct, but a common misconception.

However, if your total income during the tax year is less than your annual personal allowance, then no tax is due. This is where the misconception arises.

If you are working during the holidays, then completion of form P38(S) will result in no tax being deducted.

I have been working for various temping agencies over the last year, on an emergency tax code. How do I go about claiming any tax repayment due to me?

You will need to speak to the tax district shown on your latest payslip/P60/P45. They will be able to confirm who deals with your tax affairs and what documentation to send to them.

I have recently started a weekend job. I get £5.50 per hour and I had a cheque for £55.00. My employer has taxed me, so it now reads £42.90. Is this right?

You are being taxed at the 'Basic Rate', which means that for every £1 you earn you are paying 22p tax. If you have no other sources of taxable income then you shouldn't be paying any tax whatsoever. You need to ask your new employer for a form 'P46' - by completing this your employer will be able to arrange with the tax office to allocate a correct PAYE Code Number against your earnings so that you pay the correct amount of tax. You will also then get any tax back which you shouldn't have paid.

I have started working in restaurant as a second job. I thought that the cash tips would be useful but, to my annoyance, the tips go through the till and are paid through my wages - therefore they are taxed. Is this the law and, if not, why is my employer doing this?

Yes. It's income so it's taxable. If they didn't deduct PAYE tax, you'd only have to declare the income and pay the tax later.

From experience, the Revenue really don't believe that this is likely to happen, so they get the tax up front.

I have the use of a company motorcycle that is valued at £5,000 (incl. VAT). Should I calculate my tax including the VAT?

The Revenue consider cost to include VAT (whether recoverable or not).

I use my own car partly for business use. How do I reclaim the business mileage?

The Inland Revenue have produced a leaflet www.inlandrevenue.gov.uk/pdfs/ir125.htm which gives full details of the amounts you can claim and the different scenarios that occur. It is extremely informative and provides numerous examples and frequently asked questions.

I work in an office that requires me to wear shirt, trousers and tie. Can I claim a tax rebate, as I do not wear these clothes for my own personal use?

You would have to prove that the cost of the clothes has been 'wholly, exclusively and necessarily' incurred ‘in the performance of the duties of the office or employment’.

The wearing of a suit/smart clothes to work does not fulfil these requirements so you cannot make a claim.

I would like to know how to calaculate the tax payable on a company motorcycle.

Normally 20% of Market Value and running expenses, less any contributions, and any business use.

If an employer supplies a four-wheel drive vehicle that has no rear seats or rear side windows, should it be classed as a Car or a Van for tax purposes?

If the vehicle's laden weight can exceed 3500 kgs, it cannot be a van. If not, it might go either way. If the vehicle is licensed as a goods vehicle, does carry goods and not people, then there is a strong case for it to be classified as a van.

If I fail to submit my P11D to the Inland Revenue, how will I be fined and at what rate?

If you're talking about your own P11D, you don't need to submit it. That's the Employer's responsibility.

You just have to worry about putting the details on the Tax Return and submitting that by 31 January after the end of the Tax Year (5 April).

If you're an employer, then the penalty is on the P11D(b) Return you submit to the Revenue.

Is the Actual Method for working out the business use of my own car still relevant from April 2002?

From April 2002 you will have to use the fixed profit car scheme rates.

My boyfriend works as a welder. Is it true that he can claim tax back against clothes/shoes that he buys for work?

If your boyfriend is self-employed he can claim the cost of protective clothing and safety equipment. eg. goggles, against tax in his accounts. If he is employed his employer or trade union may have an arrangement to receive a flat rate expense against his PAYE code. Personal clothing is never tax deductible.

My employer has lent me some money repayable in the future. Is this a taxable benefit in kind?

If during the tax year the balance of the outstanding loan is £5,000 or less, there will be no benefit in kind on you. If the loan is greater than £5,000 at any point, the whole amount of the loan will be charged to interest at the official rate, for the period it exceeds the £5,000. This will then be assessable on you.

My wife has had two part time jobs for the past 15 years. With only part of her personal allowance being set against one of the lower paid jobs. Can she reclaim any tax she has overpaid for the 15 years?

Under current legislation it is possible to go back six tax years before the current one. Your wife will need to contact her tax office (reference per P60/payslip) to find out what she must do. She will need to be able to produce her P60s for the relevant years to enable the Inland Revenue to review her situation. They may request that she completes tax returns or repayment claim forms for these years. Any repayments of tax due her will then be made direct to her.

This page was last reviewed on 07 July 2004.
The information may not reflect changes in legislation made after this date.

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