It is almost two years since a teacher pay settlement was reached in Scotland. This followed a dispute that lasted more than a year including, in November 2022, the first national teacher strike over pay since 1984-85.
Yet, all this time later, not all teachers have seen the full impact on their salaries that they should have.
In January the EIS union said many teachers had been left out of pocket - potentially to the extent of tens of millions of pounds.
It criticised both HM Revenue and Customs (HMRC) and 16 local authorities (now 15) over “scandalous” overpayment of tax by teachers in the wake of the pay dispute that ended in March 2023.
Thousands of teachers overtaxed on back pay
The union points to tax changes that came into force in April 2023 and led to tens of thousands of teachers being overtaxed on back pay earned during the year 2022-2023. This was taxed at the higher 2023-2024 rate, as a result of late payments by a significant number of local authorities.
Teachers affected have likened the experience to being a pinball machine, bouncing between the twin flippers of the HMRC and local authorities, who have repeatedly deflected to each other when asked why teachers have been left out of pocket.
Last month a spokesperson for local authorities’ body Cosla said it had made it clear to the EIS and other teaching unions involved in the dispute that if a pay deal was agreed after the cut-off dates for March 2023 payments, the “back pay would be taxed in the tax year 2023-24”.
Then, on 27 January, James Murray MP, Exchequer secretary to the Treasury, wrote to the EIS after its general secretary, Andrea Bradley, had contacted HMRC in December.
“I appreciate that this has been a long-running issue and your members are looking for certainty on which tax year, and at which tax rates and bands, these payments should have fallen under,” he wrote.
He said that HMRC officials were “working to support the employers in Scotland to make sure these payments are treated correctly, and encouraging them to take corrective action where required”. He added that, given the concerns raised, officials would now give union and council representatives “further guidance including examples of the situations where corrective action would and would not be required by employers”.
Mr Murray said: “The point at which an employee becomes entitled to a payment depends on the particular terms of a pay award or contract. This means that there is not a single answer which gives the correct tax treatment for all of your members - it will generally vary depending on the specific circumstances.”
And he underlined where, in his view, responsibility lay for teachers getting the money they are owed: “It is the employer who must ensure that they are correctly operating PAYE, including making any amendments, if necessary.”
‘Encouraging’ for teachers
On 29 January, the EIS replied to Mr Murray. Ms Bradley wrote: “It is encouraging to learn that HMRC is working to support those local authorities in Scotland in which a significant number of the teachers employed have yet to receive the full value of their back pay deriving from a settlement reached in March 2023.”
She said she was “appreciative” of the imminent new guidance and hoped that the 15 councils would now, as a result, “finally engage in the processes required to enable the fair and just tax treatment of the amounts earned by their teacher employees in the 2022-23 financial year”.
Ms Bradley asked for advice on when the guidance would become available, in the hope that it would soon be followed by “a resolution to what has now been a very long-running and deeply frustrating issue”.
As of today, the EIS has not received a reply.
For now, then, many teachers in Scotland continue to be denied the full pay rise they expected two years ago - and those pinballs could be rattling around for a while yet.
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