Can't escape the Taxman

Discussion in 'Veteran Accounts' started by Uncle Target, Nov 10, 2022.

  1. Uncle Target

    Uncle Target Mist over Dartmoor

    Even in the hills of Tunisia or the Beach Head at Anzio.

    BNAF 18th August 1943

    Dear D,
    My perennial headache, enclosed is this year causing me insoluble difficulties.
    Apart that I never know how much money I have, out here I have no way of finding out.
    So I’m returning the form with the following requests
    Will you look in my P.O. savings book and see how much interest to put down in Section 3 of the statement.
    Will you look at my one and only insurance policy and see how much to put down under that heading on the back page.
    Will you then forward the form to my bank with the enclosed letter.
    As to my army pay, I thought income tax was deducted at the source anyway, according to the statements I used to get.
    But I can’t do much about that at this distance. I suppose it all works out in the end.

    I’ll make this purely a business letter and leave it at that.
    Other more interesting airmails will doubtless reach you long before this does.

    Lt Beadle was retained as an employee and paid by his company whilst away in the war.
    (This was not unusual in Territorial units)
    He was paid as a soldier from the time he volunteered, then as an officer for the duration of his service.
     
    Last edited: Nov 10, 2022
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  2. SteveDee

    SteveDee Well-Known Member

    I also thought troops were taxed by the army;

    Tax1942_3_ASDavis.jpg
     
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  3. Uncle Target

    Uncle Target Mist over Dartmoor

    I wonder if Lt Beadle's wife got a rebate after he was killed in September 1944.
    She would also have lost his Company pay.
    She lived with his parents for a while, then went back home to look after her disabled sister.
    I assume that she would have got part of his Pensions.
    Her letter to Major Shepherd MC the Battery Commander, was filled with emotion.
    Little to her knowledge, was that he would die on Christmas Day 1944,
    which would have been her husband's 30th birthday.
    They were both born within a few miles of each other in Hendon three months apart.
     
    Last edited: Nov 10, 2022
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  4. Ewen Scott

    Ewen Scott Well-Known Member

    Nothing is ever simple with tax!

    Firstly, just like today, you need to separate the assessment of the tax from the payment of it. Even today, most people, especially if they only have a single employment, don’t get this.

    PAYE (deducting Income Tax from current weekly/monthly earnings from employment in the month it was earned) as we would understand it today wasn’t introduced until 1944. At that point in broad terms for the simplest cases, assessment and payment of the tax happen at the same time.
    https://www.taxation.co.uk/articles/2011-09-21-280681-paye-story

    If you look at the Inland Revenue statement above it is for the fiscal year 1942/43 (see the heading). BUT, and it is a big BUT, the actual income being assessed to Income Tax (first line in top left hand corner) is for 1941/42. This is what used to be called the “Previous Year Basis” I.e. the income you are taxed on in one fiscal year was actually earned in the preceding fiscal year. This PY basis continued to apply to self employed income and to certain other types of income right up until the mid-1990s.

    That is the assessment side.

    So in 1942/43, presumably based on some previous estimated calculation, the Army had deducted some Income Tax from our officer between April & Dec 1942 leaving part to be collected in Jan-March 1943 before the end of the fiscal year.

    That is the payment side.

    Oh the joys of the PY basis!

    Of course today everything is different. Income Tax (and National Insurance and Pension contributions) are deducted at source from employment income monthly under PAYE. For those with other income sources we have the Self Assessment system to cope with. Fun, fun, fun!
     
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