I am not sure if this is a silly question, but if an employer makes a late payment, should tax be deducted for the year it was due or the year it was paid? In this instance I am thinking of a bonus for working abroad, when British tax was not being paid, so the difference may be significant for the employee who is now back in the UK.
Not a silly question. And not a simple answer.
But this should help...
Hmm. I see what you mean. I started reading on and decided to forward the link to the person who asked me. Thanks for your help.
All good stuff but you asked if tax should "be deducted for the year it was due or the year it was paid". I assume you mean deducted under PAYE. In that case bear in mind the payer deducts when making the payment, using the tax code etc for that tax year, *if* the payment is of PAYE income. (In this context PAYE income means taxable earnings.) In other words, you need first to decide if it is taxable. If it is, the only year the payer can deduct is the year it's paid. (This can lead to some head scratching if it is actually taxable for a different year as the total figures on the P60 etc are not the "right" ones for the tax year. Most people just ignore this but it matters if, for example, it makes a difference to the tax rate on the bonus or whatever.)
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