Allowables and tax codes
Discussion
My daughter came back to the UK in the summer after a year in OZ as a doctor and ever since the tax man has had her on an emergency tax code, which as she is a 40% tax payer and paying off student loans is making her pay slip look sick. She hasn't kept any documents for the tax she paid in OZ. She seems to think the tax man will some how sort it out, or that the IR will make do with her word about what sh earned over there (oh, to be young and silly). Does anybody know what she needs to do to get a proper tax code? I am presuming they have a reciprocal tax arrangemnet with the UK.
Second question: she is still studying for exams and doing voluntary work to extend her experience and qualify within her profession. Would some of the costs of doing that be allowable expenses for tax? For example, books, tutor fees, travelling to the voluntary work, specialist clothing and equipment. She doctors for various rugby teams and tournaments to increase her sports injury experience.
Second question: she is still studying for exams and doing voluntary work to extend her experience and qualify within her profession. Would some of the costs of doing that be allowable expenses for tax? For example, books, tutor fees, travelling to the voluntary work, specialist clothing and equipment. She doctors for various rugby teams and tournaments to increase her sports injury experience.
First part -
When did she come back to the UK?
She would only be liable to UK tax on her earmings from the date she started work in the UK onwards. She should not be liable to any UK tax on her Australian earnings.
When she started her new full time job her employer should have asked her to fill in a form P46. This would allow her employer to operate a full and proper tax code against her salary from them. The employer sends a copy of the P46 to the Inland Revenue which verifies her tax status and confirms her coding.
If she has additional income coming in from extra work she is doing,the way tax is administered on that extra income depends on whether she is earning the extra income as an employee (i.e. under the PAYE system) or as a Self Employed individual.
Extra imcome earned as an employee should be taxed at Basic Rate (22%) by that particular employer. If she already is liable to 40% tax from her main employment, that means she may have to complete a Self Assessment tax return in order to make sure she pays the missing 18% tax to the Inland Revenue.
Extra income earned under self employment is taxed entirely under the Self Assessment system and would entail your daughter notifying the tax authorities that she has commenced a Self Employment activity. There is a three month "window" from the date of commencement of Self Employment within which the Inland Revenue need to be notified. If notified after three months, a £100 late notification penalty will be charged.
Regarding expense claims, what you can claim depends on whether you are employed or self employed.
Employees can only claim expenses incurred wholly, exclusively and necessarily for the purpose of the emplyment. Note that this normally EXCLUDES travelling costs to and from work (there are some exceptions)
Self Employed individuals can claim expenses that were incurred wholly and exclusively (note the missing word "necessarily" ) for the purpose of the trade.
>> Edited by Eric Mc on Monday 2nd January 22:12
When did she come back to the UK?
She would only be liable to UK tax on her earmings from the date she started work in the UK onwards. She should not be liable to any UK tax on her Australian earnings.
When she started her new full time job her employer should have asked her to fill in a form P46. This would allow her employer to operate a full and proper tax code against her salary from them. The employer sends a copy of the P46 to the Inland Revenue which verifies her tax status and confirms her coding.
If she has additional income coming in from extra work she is doing,the way tax is administered on that extra income depends on whether she is earning the extra income as an employee (i.e. under the PAYE system) or as a Self Employed individual.
Extra imcome earned as an employee should be taxed at Basic Rate (22%) by that particular employer. If she already is liable to 40% tax from her main employment, that means she may have to complete a Self Assessment tax return in order to make sure she pays the missing 18% tax to the Inland Revenue.
Extra income earned under self employment is taxed entirely under the Self Assessment system and would entail your daughter notifying the tax authorities that she has commenced a Self Employment activity. There is a three month "window" from the date of commencement of Self Employment within which the Inland Revenue need to be notified. If notified after three months, a £100 late notification penalty will be charged.
Regarding expense claims, what you can claim depends on whether you are employed or self employed.
Employees can only claim expenses incurred wholly, exclusively and necessarily for the purpose of the emplyment. Note that this normally EXCLUDES travelling costs to and from work (there are some exceptions)
Self Employed individuals can claim expenses that were incurred wholly and exclusively (note the missing word "necessarily" ) for the purpose of the trade.
>> Edited by Eric Mc on Monday 2nd January 22:12
Thanks Eric
she was overseas July 2004 to July 2005, had a month off to bother me and then started work 1/9/05. The IR seem to want to know what she earned in OZ from April and what tax she paid on that, which is the bit she is struggling with because the Australian hospital won't reply (she should have sorted it in person before she left).
she was overseas July 2004 to July 2005, had a month off to bother me and then started work 1/9/05. The IR seem to want to know what she earned in OZ from April and what tax she paid on that, which is the bit she is struggling with because the Australian hospital won't reply (she should have sorted it in person before she left).
She COULD be liable to UK tax on the Aussie income - if she had paid no tax at all in Australia. If the Aussie employer properly deducted Australian tax from that income, the UK tax authorities will be staisfied and will not seek to tax her again. It's part of the Double Tax Agreement that exists between the UK and Australia. Obviously, her Australian employer should have provided her with the Oz version of a P45 when she left that employment.
Regarding her current UK employment, why hasn't her current UK employer asked her to fill in a form P46? That would allow them to operate PAYE correctly on her current UK earnings.
Regarding her current UK employment, why hasn't her current UK employer asked her to fill in a form P46? That would allow them to operate PAYE correctly on her current UK earnings.
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