Are there any tax experts out there that could help me out with a little question (or two!) I have?
I've been employed by the same company since 2003 my first role requiring GCSE level education. I started my current role in 2006, when there has been an ongoing pay and grading analysis at my workplace. The new role was much more challenging (requiring degree level education - which I have). I was told I couldn't have an increase on the pay scale because of the pay and grading analysis. This analysis came to an end, and I was left on the same point on the pay scale as before I changed my role. The role I moved into should have been a few points higher up the pay scale, so I appealed and won. This involved a full role analysis, so I'm not conning anyone, I do actually work hard!
As my role changed in 2006, I believe that my increase on the pay scale should be valid from my change in role in 2006, I'm going to ask for the difference in pay I should have earned between then and now. The total back pay should be fairly substantial if my back of an envelope calculation is correct.
So my question is, if I get this back pay, will it be taxed as of this tax year (thus pushing me into the 40% tax bracket), or will it be taxed according to when it should have been earned (I wouldn't have gone into the 40% tax bracket if I'd earned my salary at the correct, increased grade for my role) I'm wondering if because I went through an appeals process, the salary difference could be considered a mistake by my employer, and therefore I won't be unfairly penalised tax wise because of their error?