Will I get my employer into trouble?

Elaine_Wilson

I suppose the suggestion that this might not be taxable arises from the thought that it could be construed as compensation for the change in employment terms. If this had been paid by the UK company I think it would still be taxable as it arises because of the employment but I do not know the position with the foreign company.

I think you should do the following.

Keep the tax part of the money aside as you have already done.

Write to HMRC and tell them that you have a source of untaxed income for 2011/12 but that this will not recur in the future. Give them the amount but I wouldn't add any further details at the moment.

Ask them if they wish to code this out in your 2012/13 code number or if they wish you to complete a tax return.

If a tax return is issued, enter the amount in the Other Income box (used to be box 16 - is it still the same?). You can be pretty vague about the details of the source. The chance are they will be happy to collect the tax due and not ask for more detailed information.

In the unlikely event of them requiring more details just say the you have received a payment from (and name the foreign company).

Remember, your P60 is not wrong. It correctly shows the amount you have been paid by your employer. The foreign company is not your employer even though they own the UK one. These "bonuses" are not employment income from the UK company.

pinkteapot

twig1 wrote: »

Did you get properly taxed for the benefit in previous years? You should have received a benefit in kind statement from them with the monetary amount that would have been declared to the HMRC in a P11d . They probably don't want all the other employees that didn't negotiate for a sum of money to cover the loss of benefit to know the accountant being one of them maybe. What is the benefit that has been cut?

This is where it may get more complicated. My company pays the tax due on benefits. For example, when they renew my Bupa membership, I see the premium on my payslip and then a "gross up" entry, where the company is covering the tax liability. Therefore we don't pay tax on benefits and don't get P11D statements. That's always been this way.

The benefit that's been cancelled was that the company paid for our season tickets to travel to work. They stopped doing this (fair enough - don't know anyone else who does it). However, I travel in from a long way out and so my season ticket is more than £4,000 a year which I then had to pay for out of my net salary. The loss of the benefit was equivalent to a fairly hefty pay cut for me (others were less affected). Since I took the value of the benefit (to me) into account when I joined the company and negotiated my salary, I argued for some extra pay to compensate me for the loss of the benefit.

With regard to the company names, I don't think HMRC would be fooled if I say "I got some money from XYZ company". I work for (company name) Ltd. The foreign company is called (same company name) (country) Ltd.

E.g. If I worked for Tesco Ltd, the foreign company in question would be called Tesco France Ltd. And I have a credit on my bank statement from "Tesco France". (n.b. It's not Tesco and the country's not France ).

Good point above re the payment coming from a different company to the one I am employed by though. Makes sense now to put it in Other Income on a tax return rather than Employed.

And re me being a good person... It's more that I'm scared of being caught. I did say earlier that if they'd paid this amount as a cash bung I probably would have slept pretty easy. :rotfl:

John_Pierpoint

I think you need to explain a bit more about the benefit you have lost, what it was worth and the capitalised sum you have been paid by way of "compensation"

My bet is that this is just a small modern day example of what a politician would class as "The unacceptable face of capitalism", I think I would see it as you sticking up for the UK and you rights in negotiation with a foreign company.
Just out of interest, which overseas country are we talking about - some of them cannot get their heads round the idea that here we all work nearly 50% for the government, and cannot believe that almost every transaction involves our tax man or his local authority stooge.

With a better idea of how much the payment is and what it represents we would be better able to suggest its category on the self assessment form.
The danger for you as a PAYE person is that something might get stuck on your notice of coding and give you problems getting it off again next year.

chrismac1

Agree the last post. HMRC make no end of foul-ups with PAYE codings, again you dont' have to look far on this site for the evidence of this. So the one way you have of getting your tax right is self-assessment, you sound the sort of person who can fill in the forms without problems. You can always ask to be taken off the list so you don't get one for the next 6 or 7 years.

Again, some of the other suggestions on here - such as writing to HMRC - are perfectly fine, but all too often HMRC make such a shambles of even the simplest things they are sent in the post that the SA route in my view is less likely to go wrong.