Key information about income tax
Teachers and lecturers' salaries are normally taxed under the Pay As You Earn (PAYE) scheme, through which your employer deducts tax from your salary in line with a code from HM Revenue & Customs.
To check that you are paying the right tax you need to establish the correct code and check the deductions on your pay slip. For more information contact HM Revenue & Customs.
This page sets out details of the tax relief available on subscriptions to ATL and other professional bodies, and tax liability for various kinds of work and benefits. You can also find out about current income tax bands and the salary sacrifice scheme.
Every individual who is resident in the UK is entitled to a personal allowance. This is the amount you can earn before you start to pay tax. If you have two or more employments, you will have separate tax codes for each. Normally, personal allowances will be set against your main employment; however, the important thing is to check that your personal allowances have been set against your combined income.
Your employer should give you a P60 shortly after the end of the tax year, which will include information about your total gross income for the year and your net income after tax. You should keep P60s carefully. We also recommend that you retain and file your pay slips.
Tax relief on ATL subscriptions
You can claim tax relief on nine-tenths of your ATL subscription. To claim, contact your tax office (see your pay slip for details) and ask for Form P358.
Alternatively, write to your tax office saying that: 'I hereby claim my subscriptions to the Association of Teachers and Lecturers under ICTA 1988 (S) (201) (1) (b). Please amend my tax code accordingly.'
You need to list each year and each subscription amount that you are claiming for. You should also include the following information:
your name and address
your national insurance number, tax district and your employer's tax reference (which is on your pay slip)
your ATL membership number.
In either case, you must provide evidence of your subscription history. This information is available from ATL's membership department. For a downloadable sample letter for your tax office and more information, see our 'tax relief on your ATL subscription' page.
You can claim tax relief on the whole of your subscription to a professional body, including the General Teaching Council (GTC). HM Revenue & Customs publishes a full list of qualifying bodies.
Working at home
Tax relief for equipment kept at home and other overhead expenses can only be claimed if you can demonstrate that are contractually required to work at home (in most cases during the normal school day). The fact that you take work home for evening and weekends will not necessarily mean that you can make a claim.
You will not be able to claim tax relief on the cost of your normal journey between home and work - and if you are able to claim expenses from your employer for travelling to and from work (which is rare) then you will have to pay tax.
Travel expenses for journeys between split sites, to sporting fixtures or for other duties do not incur tax provided they do not exceed the maximum mileage allowances introduced by HM Revenue & Customs.
Allowances received for being redeployed from one site to another are taxable, whatever your income. Removal and relocation expenses and benefits are exempt from tax (up to a limit of £8,000) if you move house because of your job.
Since April 1988, examining boards must deduct tax at the standard rate from the fee payable to examiners. However, travelling and subsistence expenses are not subject to deduction of tax, and boards do not have to deduct Class 1 National Insurance contributions.
HM Revenue and Customs may consider claims for reasonable expenses (e.g. secretarial support or the use of a room at home as an office). However, claims for additional travelling expenses, or accountancy fees, are usually rejected.
Supply teachers and lecturers
ATL's experience is that, for tax and national insurance, supply teachers/lecturers are treated as employees under the PAYE scheme (e.g. tax and national insurance will be deducted before you receive your earnings).
Paid work outside of school or college
If you work for yourself, you are normally treated as self-employed and taxed under 'Schedule D'. This is a more favourable regime than the PAYE scheme, because there is more scope to deduct expenses from income.
If you are in full-time work and pay tax under the PAYE scheme, you need to declare any income from freelance work to HM Revenue & Customs.
All reasonable expenses incurred wholly and exclusively in connection with paid work outside the school/college (e.g. writing books/articles) can be deducted from the total income taxed under Schedule D. Such activities might include private tuition at your own home or at the home of a pupil.
You do not need to register for VAT unless the taxable income of all your self-employed work is more than a set limit (for 2006 the limit is £61,000) in any period of 12 months. For more information about the tax implications of starting your own business contact HM Revenue & Customs.
Since the introduction of Pension Simplification in April 2006 the position of tax relief for pension contributions has been significantly improved. There will be two key controls, the lifetime allowance and the annual allowance, as laid down by HM Revenue & Customs.
A single lifetime allowance (LTA) is the allowance against which an individual's pension savings will be tested when they take their benefits (or at age 75 if the benefits are not in payment at that age). This will be £1.5m from 6 April 2006, rising to £1.8m by 2010-11 and reviewed thereafter.
A lifetime allowance charge of 25% will be made on pension funds in excess of the LTA where the excess is taken as a pension. The LTA charge will be 55% where the excess is taken as a lump sum.
An annual allowance (AA) is also given on the amount of pension saving in a tax year. This will be £215,000 on 6 April 2006 rising to £255,000 by 2010-11 and reviewed thereafter. There will be an annual allowance charge of 40% on pension savings in excess of the AA.
Tax relief for individuals of up to 100% of earnings or £3,600 each year will be available. It will be the responsibility of individual members to ensure that they do not exceed these limits.
Living accommodation provided by schools or colleges is taxed, unless:
living in that accommodation is necessary for the performance of your duties as a teacher or lecturer
the accommodation is provided for the better performance of your duties as a teacher/lecturer and it is customary for your employer to provide such accommodation
the accommodation is provided as security where there is a threat to you as the employee.
If these conditions do not apply, then you will normally pay tax on the gross rating value of the accommodation or the rent paid by your school/college, whichever is the greater. Any rent you pay is normally deducted from the taxable value.
Employees are normally taxed on expenses connected with living accommodation if these are also provided by the employer. The employee normally pays tax on the benefit of her/his employer's expenditure on:
heating, lighting or cleaning
repairs, maintenance or decoration
provision of furniture of normal domestic equipment.
However, in cases where employees are exempt from tax on the living accommodation the tax on this further benefit is limited to 10% of the net salary.
Costs met by the employer in providing medical insurance are assessable and treated as part of the employee's salary, which is subject to tax. Where there is a group medical insurance scheme, each participating employee is taxed on an appropriate proportion of the premium.
The provision of medical costs and insurance are normally exempt if they arise from a school/college trip outside the UK.
The notional interest payable on an interest-free or subsidised loan to employees is taxed by reference to an official percentage rate which is announced from time to time unless:
the loan qualifies for special tax treatment (contact HM Revenue & Customs)
the loan totals not more than £5,000.
You may have to pay tax if a loan is written off by your employer either during your employment or after you have left.
ATL cannot give financial advice, and so this web page and ATL's guide to income tax is restricted to factual information only.
If you need more information, or if your situation is more complicated, contact:
HM Revenue & Customs
your local tax office
a financial adviser.
Need further advice?
Your first point of contact is your ATL rep in your school or college. Your local ATL branch is also available to help with queries, or you can contact ATL's member advisors on tel: 020 7930 6441 or email us. Please have your membership number to hand when telephoning and include it with any correspondence - this will help us to answer your query more quickly.