TA pay and Income Tax - A warning!

Discussion in 'Army Reserve' started by redsquirrel, Nov 9, 2006.

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  1. In these troubled times, where the Regular Army is vastly overstretched, I thought it best to offer a cautionary tale...

    If you are offered the chance to work in support of the Regular Army on MTDs monday to Friday for an extended period, carefully consider the implications for your income tax payments.

    I approached HMRC about having to pay BR tax (22%) since I had quit my civvy job to do more or less full time supporting the Regular Army on MTDs. HMRC at Cardiff advised me all I needed was to obtain the PAYE code for my employment in order to receive a rebate (as TA was now my only source of employment).

    After 3 months of asking, 3 weeks ago I finally managed to obtain a PAYE and contacted HMRC with it. Today I contacted them again to ask what progress had been made, and here's the rub...

    TA pay regardless of whether it is your only employment, can only be tax at basic rate (BR) unless you're still in fulltime education! Regardless of how many hours, days, months you work. There is no legislation, no room for negotiation because Glasgow are not equipped to deal with any tax coding other than BR.

    Furthermore, you cannot get the money back unless you have no other employment (whatsoever) in that tax year. You can claim a partial refund at the end of the financial year if you contact HMRC with your PAYE reference and payroll number (regimental number, usually). If you start a new job, you can have your yearly allowances set against that job but you won't get any money back in the form of a rebate from your TA pay.

    If you add to this, the lack of pension (and other benefits), the fact that you will be working side by side with someone of equivalent rank who is earning considerably more than you, the sheer difficulty in actually getting paid regularly for the work you have done, the lack of support and advice available when things go wrong, not to mention the disruption it will cause to your family and civilian career, I would certainly think twice about doing this again.

    So, to summarise...think twice if it's offered, it may be more hassle than it's worth!
  2. but if it's all you can get at the time, then surely some wages rather than none is a good thing?
  3. I get a tax rebate on TA pay, by putting the details in my annual tax return.
  4. i have heard that you can claim tax back on your pay if you are deplyed on ops for longer than 6 months
    anyone know if this is true
  5. Conversely, if any of you are on the higher tax rate, remember to put some money aside to pay the Tax man at the end of the year - Glasgow will under-tax you, unlike your PAYE scheme employer.

    Her Majesty will want a bit more back at the end of the year.

    Why they don't just pay us less and make it tax free, I don't know.

  6. One job or ten jobs, TA or civvy, it doesn't matter, tax (at 22%) owed is based on total earnings in the tax year. The only time you get a rebate is at the end of a tax year if you have been paying tax (at 22%) on your earnings but your total earnings did not reach the 22% threshold i.e. 5035.
    Its quite simple really.

    Also, be aware that if your civvy earnings and your TA earnings, when added together at the end of the year are more than 33,300 you will owe tax at 40% on anything else earned.
  7. All fair points, and thanks for the input. I think the thing that is p*ssing me off the most was the runaround and misinformation that I've been given.

    I hoped by posting this topic, that it would spark some informed replies that might be of benefit to others who (like me) aren't too familiar with PAYE, etc.


  8. Good clarification of the tax rebate situation. It's important to remember that Glasgow & the HMRC are completely separate. Glasgow may deduct too much tax, but eventually, you will be able to get it back.

    Re higher rate tax, don't recall the exact figure, but it's about £40K, rather than £33K.
  9. Not quite that straight forward. If you pay tax at 22% on everything, and you no consideration hass been taken of your personal allowances (which is what glasgow do) and you don't have other income - you will get a rebate. You will also need to consider whether you are a starting rate tax payer - i.e. earning very little indeed

    Also, the figure for starter/basic/higher rate taxpayers (assuming you are under 65, and not blind - don't ask - weird bloody tax laws) is

    First 5,035 earnings - pay no tax on that first 5,035
    Next 2,150 earnings pay 10% on that 2,150 (and 10% NI)
    Earnings between 7,185 and 40,185 - pay 22% on that band of pay(and 11% NI roughly)
    Earnings over the 40,185 limit - then pay 40% on the rest (and roughly 1% NI)

    Hope this helps with rates etc.

    I would suggest that if people are really concerned they seek the advice of a competent accountant.
    It is better to pay an accountant £100 to say yes everything is in order than to possibly miss out on a tax rebate or worse still end up with a £100 fine (minimum) and interest and charges and a potential court case.
    With the greatest of respect, I would be wary to trust entirely my tax liability to what some bloke told me on a website.

    Alternately you can contact the HMRC direct and they will actively help you in reducing your tax bill - they are legally obliged to. But you need to know which questions to ask........

  10. Red Squirrel on one of the multiple sh*ts I mean sheets of paper that go across my desk on the way file 13 (don't worry I do read them before they hit the file) LonDist were suggesting people who were doing more than 70 days a year should be questioned as it may be more economical for both them and the TA for them to be FTRS. Now I think there logic was this would stop those that do over 70 days but it could be used in the opposite way to demand to be FTRS.
  11. High rate tax kick in at £38,035 not £40,185. (£33,000 after the personal allowance, not £33,00 after the 10% band).

    And if the different on your tax paid though PAYE and tax owned over £2,000 in the year (ie you have £2,000+ tax to pay on balance) you will also pay your income tax in advance for the following year (Which I found out to my shock a couple year back)
  12. What bazzinho says is bang on the money in regard to the allowences.

    My tax tale:

    I worked both civvy part time job at uni and in the TA which total more than my allowances (the £5035). So come the new tax year in April I had worked out ot be about a £1000 rebate. This wasnt all the tax I had paid but the amount I had overpaid due to Glasgow using the BR tax code, which every letter I get from the tax office tell me to get changed. Using my payslips to work out how much I was due, since the pay and payslips can be "patchy" to get even using Armynet I had to wait until I got my P60 from the army. You are meant to get your P60 round about May/June at the very latest. It never appeared on Armynet till about September and was a few more weeks till I had the paper copy. Finally get the paperwork sent off in October and got my check on Wednesday and money in my bank today. So all in all it took me 7 months to get the money that Im due this year but it only took bout 3-4 months last year if I remember. And come next year I expect the same again.

    Moral of the story, you can get the tax that you have over paid but dont expect to get it anytime soon. Also do check what exactly you should pay, Im lucky as both parents work in the Inland revenue and so were able to help me get the tax rebate, although the biggest bottleneck in the process is as always Glasgow.
  13. I put in for a refund, and coudn't find my P60. HMRC were OK with me about using payslips. (Not sure if this is official policy, but I think it's reasonable for them to accept an MoD document.) Of course, if you say'this is my Jan payslip, which shows I paid £200 tax, but I actually paid £300 tax that year', there might be probs. But your March payslip should match up with the P60, and you might be able to get your refund using that. Certain worth a try next April, rather than waiting for next Christmas!
  14. Thing was mate I never got my pay slip for March and the ones on Armynet dont show tax and NI contributions unless Im not looking at the right page!