Accounting for the £250 PAYE tax free payment

Accounting for the £250 PAYE tax free payment

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Having successfully received the £250 tax-free payment for PAYE online filing 2004/05, how should a limited company actually account for this income which is clearly unrelated to its trading! We run several payrolls for our small corporate clients, and this is going to be a problem in all cases. Help!
Prue Stopford

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By neiltonks
08th Feb 2006 14:24

HMRC's advice is:

We recommend that you show the tax-free payments in your financial accounts as 'other operating income'. The payments are not taxable (wherever you show it), so your Self Assessment or Corporation Tax computations should show profit reduced by the payments included in your accounts.

Neil.

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By prue.stopford
08th Feb 2006 17:18

Thankyou!
Many thanks for your speedy reply, Neil! In fact this is exactly what I had thought I should do, but the term "other operating income", whilst suggesting a "bucket" for income which cannot be categorised elsewhere, does indicate that it should relate in some way to trading, which I do not feel that the this particular item does. However, if HMRC feel that this is the appropriate treatment, then so be it!

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