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Paying tax on ex gratia payments
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I've been doing two jobs for the past 12 months and my boss has negotiated an 'ex gratia' payment for me with HR (otherwise known as an 'honoraria' - is there a difference?)
Will I have to pay tax, NI and a pension contribution on this payment which is considered a thankyou gift from the company for my extra work?
And if they do tax me on it...can I appeal?
Will I have to pay tax, NI and a pension contribution on this payment which is considered a thankyou gift from the company for my extra work?
And if they do tax me on it...can I appeal?
Answers
Best Answer
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For more on marking an answer as the "Best Answer", please visit our FAQ.As above. Howevere there is a limit on employee's NI contributions per month (or week) provided you are not a Director, so you will probably gain in the sense that once the max. amount is reached, your deduction for NI on that payment will be capped.
If your company runs a Final Salary Scheme pension scheme, there is no advantage to you in this payment being pensionable - it won't change the salary on which your pension is based, so query this if it happens. On a Money Purchase pension scheme, the pension contribution just rolls extra funds into your own pension pot.
No you can't appeal it - it's just income.
If your company runs a Final Salary Scheme pension scheme, there is no advantage to you in this payment being pensionable - it won't change the salary on which your pension is based, so query this if it happens. On a Money Purchase pension scheme, the pension contribution just rolls extra funds into your own pension pot.
No you can't appeal it - it's just income.
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