Bankruptcy and earnings

vanessa100

Hi, I was made bankrupt for 12 months in April 08. I am currently earning a pittance of 13,500 pa. If I get a job that is above 16,000 pa will they extend my bankruptcy above April 09 period to get more money from me. And will they take all earnings above 16,00pa? thanks

jimmo

Not sure how much this will help but I can only give you a taxman’s interpretation. I would think that you would be much better posting on the Bankruptcy and living with it forum.
From the taxman’s point of view you have become 2 separate persons.
There is the bankrupt you and the post-bankrupt you.
If your current job paying £13,500 pa existed when you were made bankrupt you should now be on a tax code of NT meaning you are paying no tax. Your tax liability for this year will form part of your total bankruptcy debts and HMRC will claim that against your bankruptcy in due course.
If you move to a new job then when you start the new job you will be in a different situation to that which you were in on the date of your bankruptcy and will be taxed “normally” on your earnings.
So, moving to a job paying £3,000 pa more than your current job may not necessarily mean you will get more in take home pay in the current tax year. However, hopefully the new job will be more challenging and interesting.
I feel I must stress that I claim only to be a taxman but I think the basic principle of bankruptcy is to give you a fresh start. I can only see your move from a job paying £13,500 pa to one paying £16,000 pa as a positive step forward for you.
However your trustee in bankruptcy also has a duty to ensure that you are dealing with your situation honestly and openly.
To be frank, moving from a job paying £13,500 to one paying £16,000 is not exactly a quantum leap. If you were moving to a job paying £30,000 then your trustee in bankruptcy could have grounds for suspecting you of artificially keeping your income low.
I think you should go for it. You have to rebuild your life, but the best person to advise you might well be your trustee in bankruptcy.