Backpay and tax

#1
Ok I will first try and describe my situation.
Was selected for promotion leading rate in March 2011 just days prior to deployment on H14.
The promotion was to take place on 31st march as long as I had completed career course and leadership.
Upon return from deployment was told I could not get a career course until April 12.
Completed career course and leadership March 2013 with promotion and pay backdated until 31st March 2012.
This was shown in my pay April 2013.

Now the amount of backpay was over £5,000 and as I am now a higher band level 2 leading hand this is going to push me in to the 40% tax bracket for any LSA and other payments I receive this year. Despite the backpay having been earned the year previous where I was a lower band AB on level 7 and received no LSA as I was on course.
Can I contact the tax man and have this taken in to account as it seems wrong that money I earned last year is going to see me off this year. Or have i just dipped out and need to take it on the chin?

Hopefully I have made this as clear as I can and thanks in advance for any help.
 
#2
Unfortunately I dont think the taxman will budge, as you will have been paid the money in this tax year. It's nice that the MoD are paying you back pay, but be prepared for the answer you dont want to hear. By the way, once you earn over a certain amount you dont get taxed 40% on everything, just what you earn over the limit.
 
#3
Unfortunately I dont think the taxman will budge, as you will have been paid the money in this tax year. It's nice that the MoD are paying you back pay, but be prepared for the answer you dont want to hear. By the way, once you earn over a certain amount you dont get taxed 40% on everything, just what you earn over the limit.
Thanks for the reply was pretty much what I was expecting. I know I only pay it on anything over £32k but thats any LSA and hopefully specialist pay later on in the year.
 
#4
see if you can dump the back pay into something tax free - like a pension or childcare vouchers etc.

S_R
 
#5
Thanks for the reply was pretty much what I was expecting. I know I only pay it on anything over £32k but thats any LSA and hopefully specialist pay later on in the year.
Have you factored in your personal tax allowance? The 40% rate kicks in at £41,450 pa gross.
 
#6
I don't think the tax man cares when you earnt it, just when you got paid it.

Otherwise you could work 5 years in arrears and end up paying tax at whatever the rate was then which would get very confusing very quickly, though it would make a good loophole.
 
#8
Im not sure what you mean I thought the personal tax allowance was the first 9000 or so that you got tax free. And then that 40% tax started at 32,000
Yes, on top of the tax allowance, so = £41,450 this year.

[TABLE="class: fancy, width: 560"]
What is my income tax rate?[TR]
[TH="bgcolor: #0B2E59, align: center"]
Earnings​
[/TH]
[TH="bgcolor: #0B2E59, align: center"]2013/14 rate[/TH]
[/TR]
[TR]
[TD="align: center"]Under your personal allowance (PA)
For most, £9,440[/TD]
[TD="align: center"]
No income tax payable​
[/TD]
[/TR]
[TR]
[TD="align: center"]Between PA and PA+£32,010
For most, £9,440 to £41,450
[/TD]
[TD="align: center"]
20%​
[/TD]
[/TR]
[TR]
[TD="align: center"]Between PA+£32,011 and £150,000
For most, £41,451 to £150,000[/TD]
[TD="align: center"]
40%​
[/TD]
[/TR]
[TR]
[TD="align: center"]Over £150,000[/TD]
[TD="align: center"]
45%​
[/TD]
[/TR]
[/TABLE]
 
#9
Yes, on top of the tax allowance, so = £41,450 this year.

[TABLE="class: fancy, width: 560"]
What is my income tax rate?[TR]
[TH="bgcolor: #0B2E59, align: center"]
Earnings​
[/TH]
[TH="bgcolor: #0B2E59, align: center"]2013/14 rate[/TH]
[/TR]
[TR]
[TD="align: center"]Under your personal allowance (PA)
For most, £9,440[/TD]
[TD="align: center"]
No income tax payable​
[/TD]
[/TR]
[TR]
[TD="align: center"]Between PA and PA+£32,010
For most, £9,440 to £41,450
[/TD]
[TD="align: center"]
20%​
[/TD]
[/TR]
[TR]
[TD="align: center"]Between PA+£32,011 and £150,000
For most, £41,451 to £150,000[/TD]
[TD="align: center"]
40%​
[/TD]
[/TR]
[TR]
[TD="align: center"]Over £150,000[/TD]
[TD="align: center"]
45%​
[/TD]
[/TR]
[/TABLE]
Thanks for trying to help me, but I am being a total mong here im sure. But why is it 32k+ or for most 41k i think im missing something very key here.
 

TheresaMay

ADC
Moderator
DirtyBAT
#10
Right.... Yes u earn 9k before it gets taxed ok?

Then you can earn another 31k on top of that, which gets taxed at 20%, with me so far?

Then anything over your 9k plus 31k you get taxed at 40%

Happy?
 

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