Tax on a 'one off' payment received

Beenie

I hope there's an accountant reading this as I cannot find an answer anywhere.

The situation is that my husband has received a one-off payment at work for work he did on what subsequently received a patent.

The team received a couple of thousand pounds to share, so not a lot of money, and it was added in to their usual monthly salaries and taxed at source.

The question is this: this payment is a complete one-off. They are not expected to produce patentable work, and their employment income is not dependant on such a result.

Should this payment have been taxed? If it was (say) a Works Suggestion Scheme, then I believe it would have been tax free.

Any ideas?

agrinnall

Unless there is some specific scheme that HMRC operate for this type of payment then as with any other payment from an employer it's counted as income. I can't see how this is any different from any other sort of bonus payment, which you would expect to be taxed on.

Laurajo_2

Works suggestion schemes - the first 5k is tax free.

However there are quite strict criteria to meet - it must be open to all employees or all employees in a group, the employee must have come up with it 'on their own'' - the company can't say ' I want you to do this' etc, even if it would be normally beyond their usual employment duties.

I suspect the company would rather pay the employees NI on it, rather than try to argue the case with hmrc which would ultimately, I suspect, cost them more in potential accountancy fees and penalties (which are very punitive).

Beenie

OK, that makes sense. Thank you both.

jimmo

You might find this thread of interest.
https://forums.moneysavingexpert.com/discussion/4604095

getmore4less

I always try a google for any tax thing starting with HMRC

eg in this case something like

HMRC patent payments

this usually brings up something relevant enough to get a start on HMRC pages.

not read in detail but may be covered by
http://www.hmrc.gov.uk.manuals/camanual/CA75200.htm

an overview
http://www.hmrc.gov.uk/manuals/camanual/ca75000.htm


What I would be checking is if the amount given is correct, IIRC there was some legislation put in place to protect employees when they contributed to patentable ideas.