Taxation
In general, everybody who earns money is required to ensure they pay appropriate levels of tax on it. Employees are usually taxed at source – through the P.A.Y.E system. Employers are required to deduct tax and NI in accordance with the tax code that is provided to them, usually by HMRC.
In general, everybody who earns money is required to ensure they pay appropriate levels of tax on it. Employees are usually taxed at source – through the P.A.Y.E system. Employers are required to deduct tax and NI in accordance with the tax code that is provided to them, usually by HMRC.
The AEP is unable to provide specific advice on individual tax matters and recommends that any member who needs tax advice contacts either the HMRC or an independent financial advisor.
Educational Psychologists who undertake working a different, or ‘not employed’ situations – for example as a commissioned service provider will be required to declare any income to HMRC to ensure they are appropriately taxed on the income generated. Some Locum or Associate arrangements provide for the employer to deduct tax and NI contributions at source, depending on whether the worker is classed as working ‘inside IR35’ or ‘outside IR35’. IR35 is tax legislation that is designed to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used. Such workers are called 'disguised employees' by HMRC.
Trainees
In general, trainee EPs who are in a bursary scheme are classed as students, and are therefore unlikely to be taxed on that income. However, liability may change if the trainee has other sources of income. If you are in any doubt as to your tax liability, contact HMRC at the earliest opportunity.
Expenses
There are some fairly strict rules about which expenses cam be paid to you by your employer without incurring liability as a ‘taxable benefit’. For example, if you receive an allowance as an ‘Essential Car User’ this is likely to be taxed, as is any mileage claim over the HMRC rate of 45p.
Working at home
If you are required to work at home – rather than in your employer premises – you may be able to claim tax relief on a portion of your utilities. Usually, this will only be claimable if your employer does not pay either an allowance, or a calculated expense. Details can be found on the HMRC website.
You can find out more here.
