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Where Taxpayers and Advisers Meet

Small amount of untaxed income from Australian university

asb
Posts:2
Joined:Tue Nov 19, 2019 12:13 pm
Small amount of untaxed income from Australian university

Postby asb » Tue Nov 19, 2019 12:28 pm

The vast majority of my income is from a "simple" employment and taxed via PAYE. I've been doing self-assessment for the last few years because I also have a small additional income as royalties from a book.

In the 2018-19 tax year, which I'm filling in my tax return for now, I did a one-off piece of work for an Australian university (external examiner for a PhD thesis). I was aware that there is a section on the tax return for additional untaxed income, so at the time I assumed I would declare this income there. However, now that I'm filling in the tax return, I see that there are actually two sections, one for extra untaxed UK income and one for foreign income.

All of the work I did from the comfort of my living room (I didn't get to visit Australia!), and I was paid in UK pounds into a UK bank account. I was therefore fairly confident that this should be listed as UK income, not foreign income, but thought I'd phone HMRC to check.

They have advised me that it shouldn't be either. I should apparently add another normal employment section to the tax return, listing the Australian university as an employer, and declare the money there. I'm trying to do that now, but am slightly puzzled. I was not employed by the university in the sense that I haven't had a pay-slip from them, or a P60 declaring the money they paid me - there was just a one-off bank transfer for the one-off piece of work. Therefore I can't fill in fields like the PAYE tax reference of the employer (I have to say "None", which is apparently only for exceptional circumstances - this doesn't feel very exceptional!), and the only logical place that it looks like I can declare the money is in "Tips/other payments not on your P60".

So ... does anybody know if the advice from HMRC to add another employment section is correct? And if so, am I filling in that section correctly (specifically the "None" in PAYE reference concerns me)? Or should this be declared under one of extra UK income or extra foreign income, and not as an additional employment?

jerome.lane
Posts:237
Joined:Mon Aug 12, 2019 8:41 am
Location:Sandhurst, Berkshire
Contact:

Re: Small amount of untaxed income from Australian university

Postby jerome.lane » Tue Nov 19, 2019 1:41 pm

By default, all examiners fees are within PAYE and where a foreign employer is involved, the UK employee is responsible for PAYE payments.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye20100

It seems too late for all that now though!

I believe you can use 000/N as a PAYE code for an employer with no PAYE reference. Then just enter the sum received as being on the P60 with no tax deducted (I assume none was).

You say the amount involved is small and the engagement is arguably a self employed one, so you could include as UK self employed income. Depending on the amount of money involved, you could just bundle this in with your royalty income as it's going to be taxed in the same way although you save NIC on route one above.

You can hardly be expected to know the intricate rules so I don't think you should be dwelling on this too much.

There is a potential issue with how the Australian authorities would look to tax the payment but I assume the Uni know what they are doing. Assumptions aren't great though!
Jerome Lane
Tax Adviser
Telephone: 07943 005902

asb
Posts:2
Joined:Tue Nov 19, 2019 12:13 pm

Re: Small amount of untaxed income from Australian university

Postby asb » Tue Nov 19, 2019 4:34 pm

By default, all examiners fees are within PAYE and where a foreign employer is involved, the UK employee is responsible for PAYE payments.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye20100

It seems too late for all that now though!
Are you saying I should have done something different at the time, instead of just waiting to declare the income on my tax return now? For future reference, what should I have done?
I believe you can use 000/N as a PAYE code for an employer with no PAYE reference. Then just enter the sum received as being on the P60 with no tax deducted (I assume none was).
The online form lets me literally enter "None", which is what I've done. I was concerned that doing this would set off big alarm bells somewhere that would lead to lots of further questions coming my way, but if this is more "normal" than I think it is then I'm happy to go with it.
You say the amount involved is small and the engagement is arguably a self employed one, so you could include as UK self employed income. Depending on the amount of money involved, you could just bundle this in with your royalty income as it's going to be taxed in the same way although you save NIC on route one above.
My self-employment/royalties have actually come out at just under £1000 this year, which, as I've just discovered by filling in the form, means that I don't need to declare them. Combining the extra income being discussed here with that would take it back over £1000 again, so if it can be declared as a normal employment then I'm fine with that :-)

jerome.lane
Posts:237
Joined:Mon Aug 12, 2019 8:41 am
Location:Sandhurst, Berkshire
Contact:

Re: Small amount of untaxed income from Australian university

Postby jerome.lane » Wed Nov 20, 2019 10:18 am

Hi, the link provided explains what should have happened. However, your engagement appears so adhoc that it could be described as self employed. You could add it as self employed income and pay NIC on top or follow HMRC's advise and see what falls out of the woodwork. When HMRC advised you, it is unlikely that they had all the details and facts to consider whether the income could be self employed. You've said it's a small amount so this is possibly not worth tying yourself up in knots over. Taking a pragmatic approach is always best. You are free to give me a quick call to go over the facts rather than play tennis with these messages.
Jerome Lane
Tax Adviser
Telephone: 07943 005902


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