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Where Taxpayers and Advisers Meet

tax on railcard refund

thega
Posts: 2
Joined: Fri Mar 03, 2017 7:20 pm

tax on railcard refund

Postby thega » Mon Mar 06, 2017 12:10 pm

Hi All,

First time poster so please feel free to redirect to the correct area.

Basically my problem is this.

I have recently left my previous employer where I had an annual season ticket for travel to work.

This was an interest free loan. The company paid for it themselves on a company credit card. I paid a monthly amount from my salary.

The 6 months not used for this railcard was refunded onto the same company credit card.

My last payslip showed a deduction of the remaining 6 months under 'loan repayment'. Basically me paying the balance of what I owed for the full year season ticket. They are now going to refund me this 6 months (6 months not used), however they state the refund may need to come back through payroll as the deduction for repayment of the loan was made before tax.

My question is how would I know if the refund for the loan repayment was made before tax or not? And am I liable to be taxed at my current rate for the refund I am due. The repayment of the loan sits under deductions on my payslip.

Many thanks in advance

AmanSood
Posts: 215
Joined: Mon Jan 09, 2017 4:12 pm

Re: tax on railcard refund

Postby AmanSood » Wed Mar 08, 2017 10:20 am

Hi, the basic position is that the amount of an employment related loan outstanding is no more than £10,000 for no taxable benefit to arise. I assume your annual season ticket is less than £10,000 and therefore not considered a taxable benefit. Therefore, where your employer pays for your season ticket loan (under a loan arrangement), then normally the employee pays this back to the employer in equal instalments from their net pay i.e. after tax/NI has been deducted . The repayments of the loan can't be from your gross pay as this wouldn't count as a repayment for tax purposes. If for example your employer has incorrectly been making the deductions from your gross pay then it's an employer issue which they need to resolve (and likely this would result in additional tax/NI being due from you to HMRC). Only way for you to find out for sure is to do a manual calculation of the tax due in a particular month with and without the loan repayment. If there's a difference in the tax calculated then it's likely that the loan repayment has been made from gross pay. Otherwise if there's no difference in the tax calculated (compared to what's in your payslip) then the repayment would have been correctly deducted from your net pay.
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155

thega
Posts: 2
Joined: Fri Mar 03, 2017 7:20 pm

Re: tax on railcard refund

Postby thega » Wed Mar 08, 2017 3:31 pm

Many thanks AmanSood.


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