PAYE query

pc10

A colleague is due substantial salary arrears in his public sector job.


These relate to years 2008/09 up to 2016/17.


When added together & paid in 17/18, this will bring him into higher tax bracket whereas if he had been paid correctly since 08/09, he would have remained in normal 20% tax bracket each year.




Is there any way around this?


Thanks

jimmo

Possibly.
The basic rule for employment income is that it is assessable when it is received but that is not necessarily when it is paid.
You will need to concentrate on when the person became entitled to payment.
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim42260

The simplest cases are where the arrears of payment arose because of Equal Pay or minimum wage legislation because those legislations establish entitlement.
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim42290

For anything else its a bit more complicated but if the person can establish that they were entitled to payment in earlier years the liability can be adjusted accordingly.
In the following link the Inland Revenue won the case but don't let that put you off. Its point is that establishing when entitlement actually occurred is important.
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim42292

pc10

Thank you for that information - really useful.