External examiner fees (research degree) in tax return

fryderykchopin

I hope this is an appropriate place to post this.

I am academic staff in a UK university (University A) and last year I was invited to be external examiner in a PhD viva examination for another UK university (University B ). Not sure if relevant, but I used to work for University B many years ago, and currently I work for University A only.

University B paid me £175 as fees for the external examiner service. Their fees claim form says that "Research Degree Examiners may be regarded as self-employed so payment will be made gross." Based on this, I would assume that I can claim my trading income allowance, so I don't need to include the £175 fees paid by University B in my self assessment tax return. Is this assumption correct?

However, I'm confused because University B has given me a P45 form that states £0 as the total pay and total taxes in this employment and has reported these figures to HMRC, so my self assessment account shows two employers in the 2021-22 tax year (University A and University B ), with the correct income reported by University A and £0 reported by University B. If University B regards me as self-employed for this job, why would they issue me with a p45?

In addition to this, University B has also given to me a payslip with the payroll number I had when I used to work for them in the past, showing the £175 that I have received from them. What should I do about this? In my draft return I have declared 2 employers this tax year and entered a £0 pay/tax for University B (based on what the P45 says), but I'm not sure if this is the right way to proceed.

Thank you

tacpot12

If you don't get an answer here, I would suggest you call HMRC on the Self-Assessment helpline and ask if this income is earned income from an employment or self-employed income. Make a note of the name of the adviser you speak to and the date and time of the call. 

[Deleted User]

Some institutions issue payslips to self-employed persons e.g. sub-contractors as a form of receipt (and I know that these are included on returns by the employer). On the payslip - does it indicate a figure for ‘taxable pay’ or ‘taxable pay to date’ ? 

While offering this as a possible explanation, I really don’t understand why a P45 would be issued in that circumstance.

fryderykchopin

[Deleted User] said:

Some institutions issue payslips to self-employed persons e.g. sub-contractors as a form of receipt (and I know that these are included on returns by the employer). On the payslip - does it indicate a figure for ‘taxable pay’ or ‘taxable pay to date’ ? 

While offering this as a possible explanation, I really don’t understand why a P45 would be issued in that circumstance.

The payslip just shows the 'total payments', nothing in the deductions section. The cumulatives section only shows a figure for the total gross and zero for everything else (including taxable gross = 0).

jimmo

Your income as an external examiner above degree level is correctly chargeable as trading income.

ESM4151 - Employment Status Manual - HMRC internal manual - GOV.UK (www.gov.uk)

 

As the gross income to be declared is less than £1,000 you can claim the Trading Allowance so that no tax is chargeable.

Tax-free allowances on property and trading income - GOV.UK (www.gov.uk)

 

If you are required to complete a Self Assessment Return you need to declare the income and claim the Trading Allowance but if not there is no need to register for SA just because of the external examiner income

 

I bow to Pudyoaten2's superior knowledge about Universities and payslips and, If it were me, I would complete my Return correctly, not declaring a second employment.

 

You would be incredibly unlucky if HMRC challenged you for not declaring zero earnings.

[Deleted User]

jimmo said:

Your income as an external examiner above degree level is correctly chargeable as trading income.

ESM4151 - Employment Status Manual - HMRC internal manual - GOV.UK (www.gov.uk)

 

As the gross income to be declared is less than £1,000 you can claim the Trading Allowance so that no tax is chargeable.

Tax-free allowances on property and trading income - GOV.UK (www.gov.uk)

 

If you are required to complete a Self Assessment Return you need to declare the income and claim the Trading Allowance but if not there is no need to register for SA just because of the external examiner income

 

I bow to Pudyoaten2's superior knowledge about Universities and payslips and, If it were me, I would complete my Return correctly, not declaring a second employment.

 

You would be incredibly unlucky if HMRC challenged you for not declaring zero earnings.

Agree that it is trading income - the P45 issue has muddied the waters. 

On the trading allowance, and having completed my own return today, I note that in ‘tailor your return’ the question is ‘ have you received income from a trade exceeding £1000 (or similar wording)?

Answering ‘No’ will lead to the self-employed section not appearing further in the return completion. 

No need to complete if self-employed income £1000 or less.

see notes attached with respect to the trading income allowance (page 2)

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1062332/sa150-Notes-2022.pdf

fryderykchopin

Thank you jimmo and purdyoaten2 for your detailed responses and recommendations, it was very helpful.