Tax/Bonus/Expenses Q

[Bev77]

Hi all,

My husband gets expenses every month. He used to get them in a form of a cheque, but when he changed offices, they said they cannot do that anymore, so they pay it in with his wages. This means he is now paying tax at least twice, AND he's not getting his full expense re-imbursed.

He also gets a yearly bonus, which again is paid in with his wages, so he'll not receive his total bonus.

This month, with his overtime, expenses and bonus, he'll earn around £3k, but will lose over 1k in tax/NI. He has worked extremely hard all year to get his bonus and now he's hardly going to see any of it.

Is this legal? Are his company allowed to do this? I'm guessing they proabaly are, it's just one of life's many "it's not fair" moments, isn't it?

[Gertie100]

Shouldn't Bonus' be taxed as income anyway?
With regards to expenses my old place used to pay them as a salary adjustment so that tax/NI was not applied, which may be what they'll do.

Has the question been asked, or have you received a pay slip yet?
(To be honest I am very confused about the bonus bit, I'm sure someone more knowledgable will be along in a minute!!)

[patdavies]

Bonuses, car allowance, holiday pay, sick pay, etc. are liable to tax and NI.

Expenses (hotels, fuel, meals, parts, mileage if under HMRC limits, etc.) incurred wholly in the course of the employer's business (and usually receipted) are not liable to tax and NI and should be paid in full.

So a payslip should not include these expenses in the taxable total.

[Bev77]

To be fair, I did think that Bonus should be taxed anyway.

But I don't think it's fair, for instance, that he pays tax on his petrol, then pays tax again when he gets re-imbursed for it, as he is not getting the full amount back. Same with all his expenses.

It has been happening for about a year now, and I keep moaning at him about it, but he just says that that is how everyone gets their expenses, so they (his company) are not going to change it. He doesn't get an adjustment, it just shows as expenses and then the amounht he has claimed.

Perhaps he should increase his expenses by, what's the current rate of tax, 22%? And adjust for it himself, lol!

[Bev77]

Originally Posted by patdavies

Bonuses, car allowance, holiday pay, sick pay, etc. are liable to tax and NI.

Expenses (hotels, fuel, meals, parts, mileage if under HMRC limits, etc.) incurred wholly in the course of the employer's business (and usually receipted) are not liable to tax and NI and should be paid in full.

So a payslip should not include these expenses in the taxable total.

Ooh, thanks for that. Where does he stand now then? Is it a matter for his employer or the tax office? Or as it says expenses on his wage slip, would the tax office, just tax him on his wages and not his expenses?

[patdavies]

Originally Posted by Bev77

Perhaps he should increase his expenses by, what's the current rate of tax, 22%? And adjust for it himself, lol!

That would be fraud.

Two wrongs do not make a right.

[patdavies]

Originally Posted by Bev77

Ooh, thanks for that. Where does he stand now then? Is it a matter for his employer or the tax office? Or as it says expenses on his wage slip, would the tax office, just tax him on his wages and not his expenses?

Presumably, if he gets a wage slip, then he is on PAYE. The tax office do not levy tax - his employer does it on behalf of HMRC and remits the tax and NI to them.

If he is being taxed on expenses that are receipted and required solely for his work, then he needs to raise the issue with his employer in the first instance. If he gets nowhere, then raise it with the relevant tax office quoting his tax reference number and ask their advice.

They may simply tell him to reclaim via self assessment and/or have words with his employer.

What expenses are we talking about here? What are they for? Are they receipted? Is his employer reclaiming the VAT?

[Bev77]

Thanks for the info. I'll tell him that he should have a word with his employer and see what they say. Funnily enough he has been talking to a colleague who mentioned that he may need to fill out a self assessment.

His expenses are mainly for petrol and toll roads. They are roughly £180p/month. He has never been told to provide any receipts, although I do keep them anyway. I'm not sure if his employer claims the VAT.

[shywazz]

Think form S87 or P87 which can be down loaded from the tax office web site is for petrol tax costs etc the below might be of use to ur hubby

HM Revenue & Customs: Guidance