Date earned or date paid ? End year question

jozbo

Hi, forgive me this is probably a basic question but I can’t find the answer wherever I look.

I work as an (employed) contractor and am tying up last pieces of work before tax year end.

if I submit an assignment on 4th April will it be counted within my 21/22 or 22/23 tax year income? 

If timesheet is submitted on 4/4, unless early morning, it is usually paid the following Friday (so would be 15th April).

I am intending to start salary sacrifice once I am earning over a certain threshold but would prefer the gross pay if it’s still within the current tax year. 

Thank you 

Dazed_and_C0nfused

It will be taxed (by the employer and accepted as such by HMRC) when it is paid.

What matters is the payment date the employer reports on their Real Time Information submission to HMRC.

So if you notify the employer of work done on 4 April it is unlikely to be paid before 6 April so would fall into the 2022:23 tax year.

jozbo

Thanks, I thought as much but wanted to check. No rush to get it completed on time then. I had better sort my salary sacrifice out!

Grumpy_chap

DaC may not be correct.

Do you invoice?  In which case, the date for accounts will be the date of the invoice unless you use cash accounting basis.

If the Client generates the pay-slip from timesheets, then it will be the date on the pay-slip and that will be unlikely to land this tax year for a timesheet submitted 4th April.  This scenario would mean DaC is correct.

jozbo

I raise a timesheet with my employer (umbrella company) who invoice the agency who invoice the end client ..!

jozbo

And receive a payslip on the date I’m paid, so looks like it falls next tax year.
thanks 

Grumpy_chap

jozbo said:

I raise a timesheet with my employer (umbrella company) who invoice the agency who invoice the end client ..!

In that case, the pay date is whenever the pay slip is generated by the UC and the payment made (assuming payslip and payment are the same date - they usually are).

Absolutely no way round it - the UC will prepare your P60 based upon their dates of generated payslips and that P60 data is what will go forward to your tax return.