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Posted Tue, 23 Jan 2024 22:07:56 GMT by
Hello everyone I recently received my Income Tax calculation for year 2022/23. I was on a temp assignment via an agency that came to an end in July 2022. I understand that holiday pay is taxable. However, the holiday pay I received was what I had accrued and not used by the time my assignment came to an end. This is what I’ve read online via this link, https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim01470 "Holiday pay is normally taxable as earnings of the holiday period. But where a scheme provides for it to be received earlier, for example, by short-term employees who are paid on it by leaving, it should be treated as income arising at the time of receipt." Should my holiday pay (£2167) count as taxable? What does "it should treated as income arising at the time of receipt" mean exactly? Thank you!
Posted Fri, 26 Jan 2024 14:17:39 GMT by HMRC Admin 25 Response
Hi minwage,
Yes, holiday pay is taxable in the year it is received.
PAYE is taxable on an arising basis which means it is taxed when it is paid.
For holiday pay, this can be taxed on a receipts basis which means it may be due to be paid in 21/22 but not paid until 22/23 if this is more beneficial to you.
Whatever year it is paid though it is still taxable income.
Thank you. 

 

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