Unfair Income Tax !

rosherville

After a 9 year dispute my employers are to pay me arrears of income.
I`m told that I shall be taxed as if it were earnt in one year.
Therefore I`ll be pushed into the 40% bracket whereas much would have been taxed at a lower rate if I`d been payed on time. I`ve also lost interest had I saved it. Can the IR make concessions in such cases ?

fengirl_2

You can request that HMRC assesses this income on the earnings basis rather than the receipts basis. You would have to wait until the end of the tax year and obtain written confirmation from your employer as to the amounts earned in each tax year.

Mikeyorks

It depends when you 'become entitled' to the arrears / backpay?

If you 'became entitled' throughout the 9 years .. because an error had been made (unusual .. unless 'Equal Pay' / 'Minimum Wage') - then they should calculate these genuine 'arrears' on a year by year basis.

But if you're only entitled by virtue of a recent agreement (the more usual scenario) .. then the tax is due when the payment is made.

http://www.hmrc.gov.uk/manuals/eimanual/EIM42290.htm