Tax implications of a VS for current full time workers

[prospectiveswitcher]

Hi all -
Just wondering if anyone has any experience with this. I am due to do a paid VS but work full time. I am doing the VS during an annual leave period. There is nothing in my current contract which says I cannot hold another job so I'm not worried about that, but I am curious what happens re. my tax situation? Will this be a case where my current 'main' employer will see something askew in my tax credits after I'm paid for the VS? Even if I convert the VS to a TC, I will still be working at that firm for a few months after so would want to keep it discreet. Thanks

 

[Jessica Booker]

Your vacation scheme is likely to be on an emergency tax code where you won’t provide them with a P45, which then doesn’t impact your current employment’s tax code.

 

[prospectiveswitcher]

Your vacation scheme is likely to be on an emergency tax code where you won’t provide them with a P45, which then doesn’t impact your current employment’s tax code.

Thanks @Jessica Booker - does this mean then that I should get some tax back from the scheme payment?
Also - rather than start a new thread if I could ask you another question here - I have just been offered a place on another VS which runs concurrently with the one I have already accepted. I was quite taken aback when they called as it was a very quick turnaround so I didn't say anything on the call, but I am likely to keep the original VS offer. Practically it is easier for me to manage (one week instead of two weeks, so I would be giving my employer very little notice for two weeks leave) but I am still very keen on the firm that gave me the second offer. If I ask to move it to the summer spot are they likely to be receptive to this in your experience? Thanks

 

[Jessica Booker]

Thanks @Jessica Booker - does this mean then that I should get some tax back from the scheme payment?
Also - rather than start a new thread if I could ask you another question here - I have just been offered a place on another VS which runs concurrently with the one I have already accepted. I was quite taken aback when they called as it was a very quick turnaround so I didn't say anything on the call, but I am likely to keep the original VS offer. Practically it is easier for me to manage (one week instead of two weeks, so I would be giving my employer very little notice for two weeks leave) but I am still very keen on the firm that gave me the second offer. If I ask to move it to the summer spot are they likely to be receptive to this in your experience? Thanks

That depends on your earnings across the financial year. Emergency tax is only calculated on the basis of the 20% tax rate, so you would only get a rebate if you have not received your full tax allowance of £12,570 from your current employment. If you are on a higher tax rate (earning over £50k) then you might owe HMRC.

There is no harm is asking the second firm whether you can move to a summer scheme or a direct TC process. The worst they can say is no, but you’d be turning them down anyway, and so your position is not going to get any worse than it is now, but could get better by asking.

 

[prospectiveswitcher]

That depends on your earnings across the financial year. Emergency tax is only calculated on the basis of the 20% tax rate, so you would only get a rebate if you have not received your full tax allowance of £12,570 from your current employment. If you are on a higher tax rate (earning over £50k) then you might owe HMRC.

There is no harm is asking the second firm whether you can move to a summer scheme or a direct TC process. The worst they can say is no, but you’d be turning them down anyway, and so your position is not going to get any worse than it is now, but could get better by asking.

Thanks for the advice! I would love to do schemes at both firms to get a good feel for them so it feels a shame to say 'no' to either, and I was thinking it is probably 'worse' to say no to the first firm when I have already accepted. I'll ask them can I move it to summer and explain my reasoning - thanks again for all your help!

 

[Jessica Booker]

Thanks for the advice! I would love to do schemes at both firms to get a good feel for them so it feels a shame to say 'no' to either, and I was thinking it is probably 'worse' to say no to the first firm when I have already accepted. I'll ask them can I move it to summer and explain my reasoning - thanks again for all your help!

I’d personally go with the scheme that works best for you rather than on goodwill of accepting the one that happened first. If you can’t transfer the second offer, you can always try to see if the first offer can transfer instead (assuming that’s your preference - it might not be given your point about time off).