At the end of April 08, I was paid an extra lump sum of £2500. This was after my employer (a local authority) had spent months (maybe years) looking into the unfair pay situation and decided people doing the same job were not being paid the same. They then calculated what we should have been paid during the period 2002 - 2006 and gave it to us in a lump sum.
Up until 2006 I did not earn enough to pay any tax and even if I had been paid the correct amount of money over that period I would not have been over the tax threasehold, so still would not have paid any tax.
However because all the money was paid in one lump sum & I also increased my hours that year, it meant my earnings were much higher for that year & I ended up paying over £500 tax on the money.
I'm not a tax evaded or amything, but I'm quite annoyed that through no fault of my own I was under paid for a number of years, then when my employer finally sorts it out, I end up paying tax. If the money had been paid when it should have been, I would only have paid tax on the 2006 portion.
Is there anything I can do about reclaiming this money back. I did speak to one lady at the tax office who did not know, but after checking with someone she just said you pay tax in the year you earn it, theres nothing that you can do. Are there any experts out there who can confirm this one way or the other ?