How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
Type Your Tax Question Here...
TonyTax is online now

I should have been promoted in 2010 but there was a mistake

This answer was rated:

I should have been promoted in 2010 but there was a mistake by the promotion board and i have been overlooked for several years. My company has corrected the error and I am going to get two and a half years back pay, something like £25k. How will the tax be calculated and paid?

My current salary is £58k and is about to rise to £71k.

The pay arrears should be treated as if they were paid over the period to which they relate which will clearly cover several tax years. Take a look here for more information. Show this web page to your employer as soon as possible. If you don't and they deduct tax and NIC as if it were salary for 2014/15, you will have to wait until the end of the tax year to have the matter rectified.

I hope this helps but let me know if you have any further questions.
Customer: replied 3 years ago.
Thanks.I took the document to work today but sadly it seems my company will be giving me a lump sum and leaving me to sort it out with the tax man :(

That is odd as well as technically incorrect PAYE procedure. If they are paying you gross, you need to get that in writing from them. You should then write to the tax office and inform them of the situation and that the payment needs to be spread over the tax years concerned citing the links I gave you.

Customer: replied 3 years ago.

Sorry, I should have been more specific. Tax will be deducted at source but all at the rate for tax year 2014/15. I won't know if the tax is right until I complete my tax return in a years time.

I see. That is one of the ways that the text in the link says it can be done I'm afraid.
TonyTax and other Tax Specialists are ready to help you