Flight pay and tax?

[towser]

Just sat down to do my tax return for the year. This is the first year of recieving flight pay which is taxed differently from rest of salary. Question is how do you put this on your tax form? Its not seperated out on P60 so if I just put figures from that down on the form they won't add up! Any help appreciated.

[Bealzebub]

It doesn't need to be separated out on the P60.

What usually happens is that a percentage of the flight pay is taxable. This percentage is then taxed under normal PAYE rules at your highest marginal rate of tax.

Your pay in this employment box will include the taxable flight pay ( normally) and the adjoining tax deducted box will show the total tax deducted including that element applied to flight pay.

As a result you don't to complicate matters by showing it anywhere else on the return.

Other benefits in kind such as loss of licence insurance or private medical care or subsidised company loans etc are taxable and will not usually have had the tax deducted so you do need to declare these seperatley at boxes 1.12 to 1.23.

Hope this helps.

[towser]

Thanks for your reply. Forgive me if I am being stupid but if the amount of tax deducted verses your total pay doesn't tally with your tax code will this not come up as if you have not paid sufficent tax? Because proportionately you get more of your flight pay tax free.If that makes any sense at all!

[Bealzebub]

Your tax code is irrelevant. That is simply the amount ( subject to multiplying by 10 ) that you are allowed to earn before tax calculations at the prevailing rates start to apply.

This is the bit that should clear up the question for you. If your allowances are subject to tax on only lets say 30% of the total, then only that amount shows as your earnings in the P60. You then pay tax at your highest marginal rate ( lets say 40% ) on only that amount. As a result the amounts earned and tax paid does tally.

By way of example assume the last £5000 of your salary earned, is taxed at 40 %. For this amount you should have paid higher rate income tax of 40 % that amounts to a tax liability of £2000.

You now want to take into account the £6000 you earned in allowances. Your confusion stems from the fact that only 30 % of that amount is subject to taxation. so the taxman thinks you have a liability of ( £6000 x 40 % = ) £2400. When in fact you know that the liability is (6000x 30% x 40% = ) £ 720.

In fact the amount shown as earned ( from allowances or anything else ) is (6000 x 30% = ) £1800 as opposed to £6000. As a result when the normal taxation calculation is applied then salary plus allowances as adjusted minus applicable tax is correct.

If this doesn't clear it up please e-mail me with your credit card number and I will be happy to go into more depth. ;)

[towser]

Thanks for all your trouble. I never have understood these tax things!My credit card number is .........;)