Being sick is always a horrible experience.
This article may help to put a silver lining on being ill, as it explains you how you might be able to claim a tax refund if you were on sick leave from work.
What is sick pay?
There are two types of sick pay
- Statutory sick pay - If you are off work ill, this is the most common type of sick pay that employees get.
- Contractual sick pay - When you signed your work contract, there may have been a section which stated you were entitled to extra income above the rate of statutory sick pay
Statutory Sick pay (SSP) is paid weekly at the rate of £79.15
As your sick pay is a form of income it should be taxed and there is often the misconception that SSP is tax free.
Even though you need to pay tax on your SSP often people end up overpaying and as a result can claim a tax refund.
Often people overpay tax when they go on to SSP.The reason why people over pay is that each year, everyone is given a tax free allowance (currently £6,475). If, for example, you are on sick pay for the whole year, you would have only earned:
52 x £79.15 = £4115.80.
Because this is below the tax free allowance, any tax that you would have paid would be refundable. Even if you are not on SSP for a whole year it is possible to make a claim. At the end of the tax year you will get a P60 from your employer. Use this and a tax refund calculator to see if you may be due a tax refund:
Your P60 should look similar to this:
There are two boxes which have ‘total for the year’ written next to them and ‘Tax’ and ‘Pay’ above them. You can see a clearer image of where these are located on the P60 below:
If you have been on sick leave anytime in the last 6 years, you may be due a tax refund. The deadlines to make a claim are currently changing and we therefore recommend that you make any claims as soon as possible.
If you have any questions about being on SSP and claiming a tax refund, please leave them in the comments below and we will endeavour to answer them: