Work Expenses

[2spensive]

DW works in education and recently went away for a training course. She amassed around £300 expenses and was then reimbursed during the next months payday. Thing is the £300 was lumped on to her monthly salary and she subsequently paid tax/NI on it (confirmed this against recetn payslips).

I pointed out this isn't right. Company expenses should be reimbursed separately and she certainly shouldn't pay tax on it. She said that's always the way it's done and doesn't want to challenge it. I said if an auditor identified that in a payroll audit it would be raised as an issue. Again she has no interest in challenging it. It's BS as she's now out of pocket around £120.

Anyone else in teaching/education had a similar experience when travelling for training etc?

She absolutely shouldn't be taxed on it. It also shouldn't be included as taxable income on her payslip anyway, because it's not an income.

I work in a school (part time which is why I'm saying in a coffee shop browsing now!) and expenses here are always paid separately as you'd expect.

The school is also setting themselves up for a long pension liability if it's being classed as salary as that payment would be used to calculate this year's acrrual and paid out year on year after retirement.

Absolutely should not be taxed. I’m in academia and expenses are ALWAYS separate. Absolutely should not be out of pocket. If there is a union rep get her to contact them.

It is possible to include expenses as a non taxed addition on a payslip.

Agree that expenses incurred outside of normal place of work shouldn't be subject to tax and NI.

Cheers for the responses. Confirming what I was trying to tell her. Might show her the responses and nudge her into challenging it.

Expenses can absolutely be included on a payslip. However the expenses should be added after the tax/NI deductions have been deducted.

Yes, this. It goes through payroll, but not as taxable income.

I work in payroll and this is incorrect. It should be shown separately on payslip and not liable for tax or NI

If it was paid as a round sum expense allowance rather than reimbursement of specific expenses then it would be taxable

I am in education and expenses are claimed for as exactly this and paid on the payslip as separate items identified as ‘expenses’.

When I run payroll with expenses I always make sure they are set as non taxable. Unless it's a tiny school I am amazed they are getting this wrong. That's the best place to start. Ask the payroll team how expenses are treated gross. Taxable or non taxable. It won't sound accusatory.

Why doesn’t she want to raise it with them? I think she should and if they don’t correct it then she can raise it with HMRC to look at.

Did she give them the expenses and they input it incorrectly - or did she input it herself and do it incorrectly?

Is she sure she's been taxed on them?

Paying expenses with payroll is a very normal thing to do - the government agency I work for has done it in the past but it doesn't mean it's taxed, that's such a basic error, I'd not expect a 'school' to have not come across this before and not know how to do this properly.

An auditor wouldn’t care as it’s not wrong, it’s just inefficient and silly way of doing it. She can do a tax re return at the end of the year, or submit a form to HMRC to claim the expenses though and get a refund on any tax paid.

Mine is paid via payroll and expenses added to my payslip. The first time I saw this I thought they had been taxed, but when I checked more closely I could see I paid the same tax/NI as I had the previous month without the expenses. Maybe just check again first?

Your wife is being a mug. Tell her she owes you 50% of that tax because you're married, or the entire £120. See what she says then. I cannot stand financial incompetence at this level.

I travel frequently for work and expenses are run weekly, even on the odd occasion that payday falls on a Friday I'm due expenses it comes in as 2 separate payments to ensure it's not subject to Tax and NI. However my previous job ran it with payroll but it didn't impact my Tax or NI payments my wage slip was always a bit of a mess so double check against last month's to see what's been paid out then she either can raise it, it it's a regular occurrence I definitely would, if it's a one off I'd do a tax return to save the hassle at work.

this

How is she £120 out on £300 expenses? Are you sure she hasn’t got a new tax code or something (check the payslip) and it’s a coincidence? What rate of tax does she normally pay?

Definitely should not have been taxed.

They are out-of-pocket expenses, so they should be reimbursed in full. I don't think they should be shown on a payslip at all, they should be a separate transaction entirely.

Taxed at 40% 🤷

You are right, but you can’t force her to raise this. It’s frustrating, but she is an adult and you can’t control how she engages with her employer.

Depends on what the expenses were.

That’s why I asked what rate she paid, I guess I was thinking basic rate and TA, newly qualified maybe.