Tax warning to workers who have waived salaries or bonuses

Thousands of British workers who have agreed to forgo salaries or bonuses to help their employers during the pandemic can now pay tax bills, says leading tax and consultancy firm Blick Rothenberg

Nimesh Shah, a partner at the company, said: “Many generous individuals have agreed to waive salaries and / or bonuses to help with their employer’s cash flow or to donate to charity. It is admirable that people willing to give up their own wages to help others during the COVID-19 crisis, but HMRC’s tax rules are not that generous. “

He added: “HMRC has released a press release ( https://www.gov.uk/government/news/check-the-tax-rules-on-waiving-your-income-or-donating-to-charity ) Generous persons warn that taxation may arise if they decide to waive a salary or bonus. This pertains to specific salary sacrifice rules introduced in April 2017. The original design of the rules was ridiculous rules and should not accommodate these situations. ”

Nimesh said, “The government now has the perfect opportunity to rewrite this law after seeing firsthand the complications they cause from innocent acts of kindness.”

He added: “It is possible to manage some of the tax expenses by carefully planning ahead and ensuring that the correct documentation is in place between the employee and the employer, however many will not be aware of the exact procedure and you can easily be charged a tax on something you never received. ”

Nimesh said, “HMRC’s press release outlines options for how some of the tax burdens can be managed. Employers and employees need to address this now so they can reduce the tax burden on loyal employees who are trying to do the right thing and who will be caught differently. ”

He added: “The government and HMRC have introduced temporary exemptions or completely changed tax rules for certain situations during the current crisis – it is bizarre that they have not changed these unfortunate rules and have only chosen guidelines about how costs can be avoided. “

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