Tier 1 previous earnings. does payment in lieu of notice cou

[pra123]

Hi

I received payment in lieu of notice from my previous employer. however they have not taxed the payment.

My tier 1 general visa renewal is due next week and wanted to know if that payment would count towards previous earnings.

the visa guidance clearly states that they include payment in lieu of notice. but there is no information about the weather it has to be taxed or not.

please could anyone shed some light.

Thanks

[Manka10]

if it appears on the payslip (and taxed) then you can include it in your earnings, else it may be severance pay which is not taxed and cannot be included in earnings

[Lucapooka]

Why wasn't the payment taxed? It would not be considered income if it were not taxed you can't claim points for redundancy payments.

[pra123]

My employer has given me a letter saying it is payment made in lieu of notice.
but because it was made ex gratis, they used their discretion to not tax me.

[ban.s]

payment in lieu of notice and ex gratis payment are contradictory.

if it's the former, then income and taxable.
if latter, then not income and non taxable.

[pra123]

so basically my employer has made a mess of the payments. I can understand this as they are a very small company and not very well versed with the law.

what do I do now? is there a way out? i am mortified now.

[ban.s]

Nothing to worry. If it was genuinely payment in lieu of notice, and un-taxed, then just inform HMRC and they'll adjust that onto your 2013-14 tax code and recover the underpayment.

ps: if you are applying at PEO for extension, then you may wish to pay the outstanding tax to HMRC prior to your application.

if you are applying by post, then i would just inform HMRC and adjust the code and not pay.

[pra123]

I received £2000 in april and then £6000 in May in lieu of notice and my employment ended on 30th april. in tax year 2012-13 my total earning from the employer was below the tax free personal allowance mark of £8105.

do I still need to pay taxes on that?

[Lucapooka]

Whether you need to or whether you have to are two different concepts. You may not, under tax legislation, have to pay tax on those payments, but if they go as untaxed you can't use that money to claim points for you Tier 1.

[cs95tdg]

I received £2000 in april and then £6000 in May in lieu of notice and my employment ended on 30th april. in tax year 2012-13 my total earning from the employer was below the tax free personal allowance mark of £8105.

do I still need to pay taxes on that?

You mention that £8000 was your income for 2012-13 for "that particular employer". But have you had other income from a subsequent employer(s), during the 2012-13 tax year which is not yet over? If so you would pay taxes on any subsequent income via the PAYE system (your HMRC tax code).

[cs95tdg]

but if they go as untaxed you can't use that money to claim points for you Tier 1.

Can you provide a reference to where this is stated? I.e. that non-taxable earnings cannot be used towards claiming points for previous earnings?

[pra123]

Yes I am paying the tax with my next employer.

does anyone know of a similar case? any advice would be great

[cs95tdg]

If you are then I don't see any issue here, unless when you started employment with your second employer during 2012-13, HMRC were not aware of your previous employment.

If HMRC have a record of your current and previous employment, then according to my understanding, HMRC would adjust your Tax Code to deduct whatever tax you may have underpaid or not paid as part of your previous employment.