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Supply and tax, please give me advice!

Discussion in 'Supply teaching' started by Gemmmm, Nov 26, 2015.

  1. Gemmmm

    Gemmmm New commenter


    I started to supply this September with two agencies, one which pays me a lot more generously than the other. I've just been contacted by a school who would like to employ me as a supply as and when they need me, fitting around my commitments with my agency work.

    The school said this:
    We would employ you as a casual employee rather than take you on via an agency and you would be paid via payroll for any work that you do.

    So my question is how would this effect my tax with essentially three employers, two of those being agencies and one being via payroll? Am I going to get a higher tax rate on the direct with school work? I am just not really sure how any of this works so could do with a financially savvy person to guide me! Hope that makes sense?!

    Thank you!
  2. pepper5

    pepper5 Star commenter

    If you call your local tax office they will be able to advise you. At the end of the tax year when you fill out a self assessment tax return or get an accountant to domit for you, any tax you have overpaid will be returned to you.
    Gemmmm likes this.
  3. jubilee

    jubilee Star commenter

    Unless you expect to earn over £40k per year your tax rate will be 20% (Basic Rate).
    You only pay that 20% on money earned over your tax allowance.
    The Personal Tax free allowance for this financial year is £10,600.
    For those in employment from 6th April 2015, their 1060 tax code would be divided into 12 monthly installments (or 52 if weekly paid) and 20% tax would only be levied on income over £883 pcm.

    If you didn't work between April and starting supply in September, you still had the entire personal allowance to earn tax free before 5th April 2016 and a sole/main employer would split the allowance into 7 monthly installments (or however many weeks were left to the end of the tax year if weekly paid). That would allow you to earn £1514 pcm without paying any tax.

    If you don't earn that amount with the only/main employer, you will have no tax deducted by them.
    If you sometimes earn over that monthly amount, tax will be deducted but may be refunded in a later pay month if you under earn again.
    The issue for those who have more than one employer is that your entire tax code is probably lodged with the first agency that took you on. The second agency, even if they pay a higher daily rate, will have to allocate you BR tax code and tax EVERY £ that you earn at 20%.
    The school you mention would also start you Off on a BR tax code.

    I used to let that system continue with my multiple employers and once I knew which employer gave me the most work I rang the Inland Revenue and arranged for that employer to manage my Tax Code.
    I often did not earn more the personal allowance with the main employer which meant that some or all of the BR tax deducted by other employers was overpaid. I claimed that tax back at the end of the tax year once I'd received P60s from agencies still employing me and/or P45s issued during the tax year by employers that I'd ditched.
    The combined gross earnings were then calculated, the personal allowance amount deducted and the tax I was liable for calculated. That was then compared with the tax I'd actually paid and I always received a lump sum rebate.
    If you'd rather not wait for the end of the tax year to sort things out you can arrange to split your Personal Allowance between 2 or more employers in the ratio of your choosing. Employer one might have your tax code as 500, for instance, meaning that they will apply tax at 20% to everything you earn over £5000 over the year ( £416 tax free pcm) with the rest of the £10600 allowance split between other employers.
    I'd advise writing to your tax office to re-allocate a tax code as they keep you waiting ages now on the phone and you often don't get through. They have also now closed tax offices to the public. I used to just pop in and get forms, advice etc.

    As for getting work direct with schools, I'd prioritise it over agencies if they have made it clear that they will be paying teacher rates. The casual rate should be the annual salary of your teacher scale point divided by 195 (the number of pupils days + 5 inset days in a school year). Each LA paid supply day is thus made up of 3 parts pay and 1 part advance holiday pay (39 school weeks + 13 designated holiday weeks is a 3:1 ratio). Work every pupil day and 5 INSETS if employed long term as supply with a school and you thus get the full annual salary even when on a supply daily rate.

    I'd wait to see who emerges as your main employer and then allocate your Personal Allowance to them or arrange a 2 or 3 way split if all are likely to be paying you under £10k per tax year.

    Contact the Inland Revenue anyway to claim tax relief on your Union fees if you are in one. This will increase your tax code and decrease the tax you pay. You can offset two thirds of NUT subs, 9 tenths of ATL and 100% of some other Union fees. It depends if the Union subs include a political levy that is not eligible for tax relief.
    Also claim a £60 uniform allowance (saving £12 in tax per year) if you have to provide, replace, maintain and launder specialist clothing and footwear that you use wholly and exclusively for work. Normal work wear does not qualify but keeping a sports kit and trainers in the car in case you are called on to cover PE is eligible. When I found out about that I claimed back for the previous 6 tax years (now limited to 4 back years)
    All Primary teachers should be claiming the Uniform allowance as they all take PE. All general supply teachers should claim it as they can make the case, if challenged, that they have to invest in a kit for work just in case!
    snowyhead, disconic and Gemmmm like this.
  4. Gemmmm

    Gemmmm New commenter

    Thank you SO MUCH for taking the time to write such a detailed reply, I really appreciate that. That all makes sense to me, thank you again!
  5. disconic

    disconic New commenter

    in order to ask try and claim the rebate for PE kit etc, so i have to provide evidence in the form of receipts?
    snowyhead likes this.
  6. snowyhead

    snowyhead Lead commenter

    Great advice from @jubilee. Especially the advice regarding working directly for schools - don't forget that contributions to TPS can be made if you are put on the school's payroll too.

    Best to keep all receipts for self-assessment purposes. You may be asked to produce them as evidence if you do claim a tax allowance for them. Note: you do not get a rebate of the amount you paid out for the PE kit, your tax code will be adjusted accordingly.

    Check HMRC website for detailed information about adjustments of PAYE tax codes etc.
  7. jubilee

    jubilee Star commenter

    No! You don't need receipts. You just write saying that you wish to claim a Uniform Allowance (currently £60 offset against tax) for the 2015/16 tax year.
    If you were working and had to have trainers/PE kit for school use in previous tax year, back claim for those years (go back 4 years max I think) and specify each tax year being claimed.

    The rule is that you qualify for a Uniform Allowance if you have to buy/replace, maintain and launder clothing and /or footwear that you use exclusively for work and which your employer does not provide ... and/or does not provide the laundry facilities either.

    It's a flat figure allowance saving everyone who applies £12 per year in tax if they're a 20% taxpayer and double if they're a 40% taxpayer.

    You don't need receipts. You could even use old trainers and kit that you keep at school or in the car and which will be exclusively for school use from now on!
    Most schools require you to put on sports shoes in the gym when using that facility and you need alternative footwear from your normal classroom footwear when out on the playing fields too.
  8. jubilee

    jubilee Star commenter

    You don't need receipts because you are not offsetting the actual cost of the items against tax so the varying costs of kit and footwear are irrelevant.
    It's unlikely you'll ever be audited on such a small tax break but a photo of your kit in the car or school cupboard, or a selfie of you at work in the kit would be proof enough. They'd just accept a timetable showing that you have taught a PE lesson in the tax year though!
  9. snowyhead

    snowyhead Lead commenter

    Thanks @jubilee.

    Last year I claimed back tax on union subs for the past three years and had to provide evidence of my membership (I used my annual subscription reminder letter). I appreciate that union subs are different to claiming a flat rate expense though.
  10. jubilee

    jubilee Star commenter

    Yes, Union subs need a paper trail either when applying or if audited.

    If are with an agency that reduces/eliminates their Employer Nat Insurance contributions by paying you via a company that manages your pay as though you are self-employed, thus allowing you to offset travel and subsistence costs against pay, you also need to keep records of train/bus expenses, mileage if using a car and receipts for food and drink that you purchase for work.
    Most people think that the subsistence and travel allowance means that they are getting those expenses refunded. Not the case. You pay as usual and then save 20% or 40% tax on the costs.
    It's still cheaper overall to make your own sandwiches from leftovers or take a portion of last night's meal to heat up in the microwave than to buy food and drink and get what is essentially a 20% discount.
    If on that sort of pay scheme, however, it's definitely worth claiming the travel allowance.
    snowyhead likes this.
  11. snowyhead

    snowyhead Lead commenter

    Which is what some of the more unscrupulous supply agencies will have teachers believe when they 'sell' the benefits of being employed by an umbrella company.
  12. jubilee

    jubilee Star commenter

    Forgot to add that if you no longer have a record of your Union subs in recent years you can simply contact your Union and they will send you a statement of your payments. Tell them that you want it for tax relief purposes and they should also outline what proportion of it is eligible.

    Your tax office will use the current year's relief amount for future years until you inform them that you are no longer paying subs or that subs have increased.
    You claim based on the amounts that you pay out between the 6th of April one year and the 5th of April the following year.
    snowyhead likes this.
  13. nearmiss

    nearmiss Lead commenter

    Yes, I agree, a lot of agencies are simply unscrupulous but also some individual consultants are simply badly trained and badly informed. Don't rely on them to tell you what your rights are.
    On that topic, new guidance is being formulated after a consultation. Have a look and see what you think.

    What I'm reading here is that the position of supply teachers is still not specifically covered by this consultation. It certainly looks like people who are in long-term placements do not qualify for tax relief for travel and subsistence and should not be paid through UC. Therefore those teachers who are working through and agency and being paid via an umbrella payroll company should have the choice of UC or PAYE.

    There is now a legal precedent for this.
    this is of course a case from the building trades sector but as such it could be applicable to the education sector.
    It could serve to strengthen any case that an individual member brings to their union if they have concerns about their payroll provider.

    I cannot stress enough the need to:
    1. read your contract before you agree to it and
    2. join a union (it's too late to use them once it all goes pear shaped)
  14. jubilee

    jubilee Star commenter

    Joining a Union as a supply teacher can be quite cheap too.
    Work out how many days you were employed in the last academic year. As my work dwindled from 165 days per year to about 35, I reduced my membership category with the Union from full-time, to two thirds to , finally, one third equivalent. With tax relief off that, it's really not worth the risk of NOT being in a Union.
    snowyhead and nearmiss like this.
  15. snowyhead

    snowyhead Lead commenter

    That's so useful to know @jubilee. I had no idea that you could reduce your membership of a union in proportion to how much work you do as a supply teacher. A job for tomorrow.

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