Tax on payment from work.

jonnya2001

i have recently recieved a back payment from work regarding a working time directive issue. i had to sign a legal agreement for this but the problem i have is that when the money went in through payroll it pushed me into the higher tax rate which was not agreed or mentioned in the agreement so i have now lost a larger % of the money i recieved due to this.

Where do i stand in regards to this problem.

jobbingmusician

Has the payment gone through in this year's tax year? Because if it has, it may have pushed you TEMPORARILY into the higher rate tax bracket, but it will sort itself out (or most of itself out) over the tax year.

Is it a payment for several years, which has been made all in one lump, so that your tax liability would have been lower if it had been paid at the time? If so, I would ring HMRC (they are quite helpful, honestly) and ask their advice - beyond my limited expertise, I'm afraid.

You might get a better response to this one on the tax board (although you may as well leave it here for a day or two to see who responds ) - I am happy to move it for you in a while if that's what you'd like.

amiehall

The most important thing is whether your total normal annual wage plus this back payment comes to more or less than £41,865?

If it is less, then this will sort itself out and you will receive the tax back over the course of this tax year automatically.

It it is more, then you will need to take some action. You are able to have the income taxed as if it were paid in the year it should have been, which may reduce your tax bill. I would speak to HMRC about this in the first instance if it applies.