All types of remuneration received from your employment are taxable and must be declared on your income tax return. This includes:
- overtime pay
- holiday pay
- tips and gratuities
- income from labour only sub-contracting
- redundancy and termination payments (although the first £50,000 is tax free)
- payment in lieu of notice
If you need help completing the employment section of your tax return watch our help video.
Employment: tax form help
If you have to pay for items that are solely for performing your duties and you don't get refunded by your employer, you may be able to claim them as a deduction from your employment income.
Reimbursed expenses and other cash payments
If your employer pays a round sum allowance or reimburses out of pocket expenses, these payments are taxable as part of your normal wages.
Any part of the amount paid which is for expenses wholly and exclusively incurred in the performance of your duties can be claimed as an expense on your tax return.
Claiming a deduction for employment expenses
Expense allowances which are not taxed and do not need a formal claim
Payments made in respect of duties performed outside the Island will not be charged to tax and do not require an expense claim if they fall within the following limits:
- incidental expenses allowance £10 per day
- meal allowance, where bed and breakfast accommodation is provided £25 per day
- no meals or accommodation provided £100 per day
Payments made if you are required to use your own vehicle for business purposes and your employer keeps a record of business mileage are not charged to tax as long as the allowance does not exceed:
- Cars 60p per mile
- Motorbikes 30p per mile
Where a meal allowance is paid if you're working unsocial hours the first £5 per working day is not taxed.
Reimbursed private expenses
Where your employer reimburses any of your private bills (eg if your employer pays for the airline tickets you have bought to go away on holiday), such a payment is assessable as part of your salary.
If your employer pays the bill directly to whom it is due this is also taxable, but by concession is treated as a benefit in kind.
Tips and gratuities
If you receive cash tips and they are not included in your gross pay from your employer, keep a record of the amounts received and include the income on your tax return.
Casual and weekend work
This is generally small one off cash-in-hand income generated by ad-hoc work you perform outside of (and not associated with) your normal day-to-day work.
You must declare this income. If it becomes a regular source of income you will be considered to be self-employed and you should declare it under the self-employment section of the tax return.
You will have to pay the tax and any social security contributions yourself.
Self-employment income and tax
Employment income is taxed on a receipt basis. If you receive backdated pay, it is taxable in the year you receive it.
Labour only sub-contractors
If you work in the construction industry, you may be contracted as a labour only sub-contractor. ITIS deductions are made from this income at 21% unless you have an exemption card.
Labour only sub-contracting income and tax
Lump sum payments
If you receive a lump sum from your employer to prevent you from resigning or to continue serving in their employment, that lump sum is taxable and must be declared on your income tax return.
Termination or redundancy payments are also taxable, however the first £50,000 can be paid tax free.
Tax on termination and redundancy payments
Any payment resulting from injury, death or disability is exempt from tax without limit.
Token gifts or token gratuities given entirely at the discretion of the employer may be tax free by concession. (Personal tax concession P10)
Concession and practice
Paying income tax on your earnings
If you'd like to know more about the regular deductions made from your salary through the Income Tax Instalment Scheme (ITIS), see our section on paying income tax on your earnings (ITIS).
Paying income tax on your earnings (ITIS)