Joining bonus taxable?

Herbalus

When an employee is paid a joining bonus, is this bonus treated as part of the salary and therefore subject to income tax, NI contributions, student loan repayments etc?

quietriot

Yes, it is.

somethingcorporate

Pretty much all income is taxable.

chrisbur

An interesting item relating to this here....
http://www.accountingweb.co.uk/sites/default/files/siftmedia-accountingweb/old_downloads/newthwire/newthwire_120.pdf

This is a few years old so things may have changed since then so if anything here looks like it might apply to you, and the tax saving is going to make it worth while, might be worth getting expert advice on this.

purdyoaten

chrisbur wrote: »

An interesting item relating to this here....
http://www.accountingweb.co.uk/sites/default/files/siftmedia-accountingweb/old_downloads/newthwire/newthwire_120.pdf

This is a few years old so things may have changed since then so if anything here looks like it might apply to you, and the tax saving is going to make it worth while, might be worth getting expert advice on this.

Indeed - I had HMRC challenge a 'golden hello' tax free payment for a client a few years back and was successful.

A similar article - up to date:

http://tax-essentials.indicator.co.uk/advisors/pack/41382/documents/41383/topic/41913/documents_detail/kt_41913_85210_4678/?i=1

Herbalus

That is an interesting link. I can't see that it applies in this case however, as most examples in the document relate to quirks in the system or specific and particular examples.

The case I'm asking for is a straightforward joining bonus of a few thousand pounds, and isn't in return for any experience or inducement to leave another firm. The company providing the bonus have said it's expected that the employee uses the money as part of moving costs. I guess it's a lump sum like any other guaranteed, non performance related bonus.

It's a large international company that will no doubt know the tax status, and any deductions will probably be made at source anyway, so I don't think I'll have too much to worry about.

purdyoaten

Herbalus wrote: »

That is an interesting link. I can't see that it applies in this case however, as most examples in the document relate to quirks in the system or specific and particular examples.

The case I'm asking for is a straightforward joining bonus of a few thousand pounds, and isn't in return for any experience or inducement to leave another firm. The company providing the bonus have said it's expected that the employee uses the money as part of moving costs. I guess it's a lump sum like any other guaranteed, non performance related bonus.



It's a large international company that will no doubt know the tax status, and any deductions will probably be made at source anyway, so I don't think I'll have too much to worry about.

Relocation costs - different altogether:

https://www.gov.uk/expenses-and-benefits-relocation/what-to-report-and-pay

https://www.gov.uk/expenses-and-benefits-relocation/overview

Herbalus

Definitely food for thought. I'm not sure I'd get away with claiming it as relocation costs, as the company said it will be a lump sum in cash, and that they expect it will be used for relocation. I think that's a tenuous link. I'll have to wait to see how it's worded in the contract.

In addition, it falls foul of a few of the golden hello criteria - it's almost certainly repayable if employment is not taken up, and I'm not losing any benefit by joining them.

pjread

Herbalus wrote: »

Definitely food for thought. I'm not sure I'd get away with claiming it as relocation costs, as the company said it will be a lump sum in cash, and that they expect it will be used for relocation. I think that's a tenuous link. I'll have to wait to see how it's worded in the contract.

In addition, it falls foul of a few of the golden hello criteria - it's almost certainly repayable if employment is not taken up, and I'm not losing any benefit by joining them.

I'd read that between the lines as "We'll pay tax free as relocation, if that isn't it we'll leave you to deal with". I'd strongly suspect it should be taxable (unless actual relocation occurs) but sounds like they'll leave that between you and HMRC

somethingcorporate

When I joined our big company relocation costs were tax-free and the "hello" expected to cover other costs (e.g. mortgage etc) was taxable.

BobbyL1

Hi all,

I'm in the middle of negotiating a new position with a new company and have been thinking of using the "Golden Hello" as part of my deal, If I accept the new role I will walk away from quite a large Bonus that is due to be paid from my current company.....Does this qualify the "Golden hello" to be exempt from Income tax or not?

I have also been offered a relocation sum of £8k which is tax free, can this be paid upfront?

Many Thanks