Backdating payrise to previous tax year

[Charliebrown]

We have an employee who has been awarded a backdated payrise to Feb 2009. Could anyone tell me how this needs to be put through payroll? Do I just put the whole difference between what was paid and what should have been paid through this month's payroll or do I need to go back and adjust last year's payroll forms for the part that relates to 2008/09? Many thanks in advance.

[taxattack]

We have an employee who has been awarded a backdated payrise to Feb 2009. Could anyone tell me how this needs to be put through payroll? Do I just put the whole difference between what was paid and what should have been paid through this month's payroll or do I need to go back and adjust last year's payroll forms for the part that relates to 2008/09? Many thanks in advance.

Just put it through this month's payroll.

Chris

[Blackberry]

Pay the gross difference this month

tax and Ni are calculated when the payment is made and not back dated, and so will all be collected this month.

no need to adjust your 2008/09 forms and returns

[Firefly2008]

CharlieBrown,

Once we have entered the new tax year and passed the magic date of 21st May, you cannot make any further alterations to your previous tax year's forms.

In any case, NI should be calculated on the current pay period and in most employee's cases this will benefit them as the lump sum payment will take them over the upper earnings threshold resulting in them only paying NI at 1% on a portion of their earnings for that period.

As tax will (in most cases) be calculated on a cumulative basis, the majority of tax arrears will be taken in the pay period that the arrears are paid. However, the employee will receive any overpayments of tax over the remainder of the year.

Hope this is helpful