Heart thudding... about to cry - please help?

shelley81_2

Hi Blue Monkey

No, no PD11 - never even seen one! It's odd as I've had this loan before but no hike in Tax...
Yes, same employer for 8 years, so that's another reason I'm so shocked.

mrkbrrws

It looks like the £619 might have been taxed, as 20% tax + 11% NIC would be about the increase you have seen.

shelley81_2

Hi mrkbrrws!!

I thought a loan under £5000 wasn't taxable... don't quote me on that though!

mrkbrrws

Is it a loan? Do you have to pay back the £619?

shelley81_2

Hiya

It is a loan tatalling £1032. I have to pay back £413 periodically and my company has subsidised the £619.

I've been looking on hrmc website etc and all I can find is that small loans are not taxable under £500, but I'm not sure how it works with a subsidised loan. Think I'm going to have to check the policy or speak to payroll.

Still tearing my hair out as to how I'm going to cope with £200 'missing' from my paypacket!

mrkbrrws

It sounds to me as if you have been lent £413 (which isn't taxable) and given £619 outright (which would be taxable as earnings?)

Maybe I don't understand the employer's loan scheme?

cfnc

You have been taxed on the subsidy of you loan in one go this month, next pay day you will only be taxed on your salary and approx will pay £353 in tax and £200 in NI if it is based on a monthly pay or approx £360 in tax and £204 in NI if it is based on a 4 weekly pay.

Hope this helps,

Kirsty

DCodd

It would seem that your Payroll dept have added the Loan to the taxable elements of your pay and as such it has been taxed as an income. As your payslip is, I assume, for March 09 and you start afresh in April as a new tax year, you may have to apply to HMRC for a tax refund for the non taxable element of the loan. Your tax code of 635L sounds as if some kind of tax penalty has been applied to your code as a "normal" code for this year is 644L however this code would not apply until your April payslip.

Speak to your payroll manager and see what they say.

Without the exact information of how the loans are processed within your company it would be impossible to give an accurate assessment of exactly what you are entitled to tax free.

johnllew

mrkbrrws wrote: »

It looks like the £619 might have been taxed, as 20% tax + 11% NIC would be about the increase you have seen.

That appears to be the case. If £619 of the loan has been written off (OP has called it "subsidised") then it will be taxable:

http://www.hmrc.gov.uk/manuals/senew/SE01490.htm

SE01490 - Emoluments of employees and office holders: loans released or written off

Section 19(1)1 ICTA 1988

The release or writing off of a loan made to an employee by an employer is an emolument chargeable under Section 19 (1)1 ICTA 1988 if the writing off can only be ascribed to the fact that the borrower is an employee. It is an emolument for the year the loan is written off.

John_Pierpoint

There is another thread like this one where someone's subsidised season ticket has gone up to 7,100 pounds and the tax payer is in the 40% band.
An even nastier shock in money terms.

http://forums.moneysavingexpert.com/showthread.html?t=1617469