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Where Taxpayers and Advisers Meet

Taxable Benefits - ITEPA or ITTOIA

section 44
Posts:4467
Joined:Thu Oct 30, 2008 12:47 pm
Re: Taxable Benefits - ITEPA or ITTOIA

Postby section 44 » Thu Apr 21, 2016 11:21 am

Under PAYE I don't think you have a choice?
Of course you do. When you self-assess your tax liability in certain circumstances you are offered (in your tax return) the option of requesting that the tax due is collected through you tax code. If your tax code isn't adjusted then PAYE is irrelevant.

Taxo
Posts:21
Joined:Sat Nov 07, 2015 2:32 pm

Re: Taxable Benefits - ITEPA or ITTOIA

Postby Taxo » Thu Apr 21, 2016 11:40 am

Under PAYE I don't think you have a choice?
Of course you do. When you self-assess your tax liability in certain circumstances you are offered (in your tax return) the option of requesting that the tax due is collected through you tax code. If your tax code isn't adjusted then PAYE is irrelevant.
Indeed, but if you have no ITTOIA income and are fully ITEPA based. A link to information showing how ones tax code is adjusted for receipt of these benefits would be helpful. Can you provide one?


Taxo
Posts:21
Joined:Sat Nov 07, 2015 2:32 pm

Re: Taxable Benefits - ITEPA or ITTOIA

Postby Taxo » Thu Apr 21, 2016 12:00 pm

Mmm! A philosophical point: in that case an individual unfortunate to suffer SSP followed by JSA for a full year or even JSA for a full year would be a basic rate (BR) tax payer in the following year. It would seem that this benefit income is ITEPA from the first penny earned. So what purpose does 403 serve?

section 44
Posts:4467
Joined:Thu Oct 30, 2008 12:47 pm

Re: Taxable Benefits - ITEPA or ITTOIA

Postby section 44 » Thu Apr 21, 2016 12:14 pm

So what purpose does 403 serve?
Nothing insofar as state benefits are concerned.

section 44
Posts:4467
Joined:Thu Oct 30, 2008 12:47 pm

Re: Taxable Benefits - ITEPA or ITTOIA

Postby section 44 » Thu Apr 21, 2016 12:39 pm

or even JSA for a full year would be a basic rate (BR) tax payer in the following year
Nonsense. JSA doesn't exceed £200 per week (hence personal allowance) and in any event one year's taxable income does not affect subsequent tax liabilities. As I previously mentioned, tax coding for previous year's tax liabilities is only about recovering an unpaid tax debt.

Taxo
Posts:21
Joined:Sat Nov 07, 2015 2:32 pm

Re: Taxable Benefits - ITEPA or ITTOIA

Postby Taxo » Thu Apr 21, 2016 12:55 pm

or even JSA for a full year would be a basic rate (BR) tax payer in the following year
Nonsense. JSA doesn't exceed £200 per week (hence personal allowance) and in any event one year's taxable income does not affect subsequent tax liabilities. As I previously mentioned, tax coding for previous year's tax liabilities is only about recovering an unpaid tax debt.
Yes I concede the point. But 26wks on SSP and 26wks on JSA would reduce the £11,000 free pay by £4200 or so. Looks like I'm not going to be able to separate these benefits from ITEPA. So, if 403/404 is not about benefits can you provide an example of how and where the £30,000 exemption would apply?

section 44
Posts:4467
Joined:Thu Oct 30, 2008 12:47 pm

Re: Taxable Benefits - ITEPA or ITTOIA

Postby section 44 » Thu Apr 21, 2016 12:59 pm

But 26wks on SSP and 26wks on JSA would reduce the £11,000 free pay by £4200 or so.
But what other income (in excess of £7k or whatever it is) would the recipient be expecting in that same year?
can you provide an example of how and where the £30,000 exemption would apply?
Redundancy pay

Taxo
Posts:21
Joined:Sat Nov 07, 2015 2:32 pm

Re: Taxable Benefits - ITEPA or ITTOIA

Postby Taxo » Thu Apr 21, 2016 1:11 pm

But what other income (in excess of £7k or whatever it is) would the recipient be expecting in that same year?
Good point! Never considered redundancy. Well this about wraps things up. Thanks everybody for your help.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Taxable Benefits - ITEPA or ITTOIA

Postby bd6759 » Thu Apr 21, 2016 5:14 pm

Taxo
Benefits in ITEPA refer to benefits from an employment: a car, medical insurance, free gyms and a host of other things. s403, and all parts other than part 10, have got nothing whatsoever to do with social security payments. A payment or a benefit that might otherwise escape taxation as income from an employment, such as an ex-gratia or a redundancy payment, is caught by s401. This is a catch all section, but it exempts the first £30K.

The benefits that you mean are social security payments. They are covered in Part 10.

SSP is paid by an employer, therefore the payment, because it is taxable, goes through the payroll. If any tax is due, it is deducted at that time.

JSA is well below the tax threshold so PAYE is not needed. When a JSA claimant finds work, they receive a P45 showing the amount of JSA received added to the pay that was shown on the P45 the claimant handed in when they started claiming JSA. The new employer then works out the correct tax using these figures. It is how the PAYE system works.

But three pages in, I really have not got a clue what your actual question was. And I don't think you understand anything you have been told.


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