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bigduckontax, Accountant
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As an employee, if I finish working for a company in March,

Customer Question

As an employee, if I finish working for a company in March, but am not paid until the middle of April, which tax year do I have to declare the earnings against - i.e. is the tax liability calculated from when the work is done or when the payment is made? Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
Well, under the PAYE system, in which your firm presumably operates, it will be part of your April income. However, in the circumstances you can approach your tax office with a view to having it adjusted to the prior year as it was earned for duties performed in that year.
However, my immediate opinion is why bother unless you are in danger of being put in a higher tax bracket in the current year? There might be the question of levels of pension private contributions to be taken into account, also. PAYE is a 'swings and roundabouts' system and generally works quite well to make you tax neutral by the year end. It's a case of if it works, don't fix it!
Perhaps you may wish to throw some detailed light onto your exact position.
I do hope I have helped you resolve your conundrum.
Customer: replied 2 years ago.

Keith,

Thank you for your reply.

My firm does operate a PAYE system.

The situation is that I earned much less in the previous tax year than I will in the current and if the payment is allocated to the current, then I will indeed pay much more tax, than if it was allocated to when it was actually "earned" in the March.

My old firm has issued my P60 and has allocated this payment into this tax year rather than last and I am wondering if I can get HMRC to re-allocate to the previous year, so I can reduce my tax bill.

Expert:  bigduckontax replied 2 years ago.
Exactly the situation I envisaged. As I said, write a letter to your tax office explaining the situation and get them to make an adjustment. You can find the address and reference of your tax office on your notice of coding. Don't blame your old firm, they are merely working within the parameters of PAYE as they must.
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bigduckontax, Accountant
Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

A word of caution, though, you may have to plug away at your tax office to achieve the solution you require. I can see at lower levels in an office them simply not understanding why you want the adjustment made.
Customer: replied 2 years ago.

I will definitely press them on this. politely but firmly !


 


Thanks again for your help


 


Matt

Expert:  bigduckontax replied 2 years ago.
Delighted to be of assistance, Matt.

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