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Deducting damages from employee pay - taken from net or gross?

Deducting damages from employee pay - taken...


I got asked this question yesterday, and i should probably know the answer, but it hasn't come up before in my short career and therefore intrigued me to find out for my own sake. I've looked all round google and HMRC docs to find the answer, but still cannot see it in black and white. So now i seek the help of accountingweb members.

If it had been agreed in the employment contract that damages incurred to equipment etc could be deducted from employee pay, would these be deducted from the gross or net figure?

I'm heavily lent toward it being deducted from the net, only because what i have learnt about pre tax deductions consists mainly of pensions and similar.

It makes sense that these expense are incurred for the purpose of the trade (IE wouldn't have been incurred anyway, required to get business back to operating as before) however i have also seen a case whereby other damages were not allowable as a pre tax deduction as it effectively shared the burden with society.

Maybe i have read to much into this now and have muddled my own thinking, so please can someone just clear this up and point me in the right direction.

Thank you


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22nd Feb 2013 16:47

Deduct from Net Pay

you are recovering money for damages so is a money only transaction nothing to do with PAYE

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