When is a Payment to the University NOT Classed as Income?

The Criteria of the Four R's

Money coming into the University, be it in the form of cash, cheque or debit/credit card payments, is NOT classed as income when it is a:

If the money coming into your department meets the criteria of the four Rs then it is possible to credit this payment to the University to a cost centre account when paying-in money to the University. In these circumstances the cost centre account should reflect the NET cost to the University.

Guidance on whether the payment is really income is also available by contacting the Finance Manager for your Academic Department or Professional Services Department.

For advice on whether your income is subject to VAT, or which VAT code to use, contact the Tax section.

Further guidance is also available on When is income CLASSED as income?

The Four R's

  1. Is the ‘income’ Repayment of a cash advance for expenses?

    YES? Then it is OK to credit the cash, cheque or debit/credit card payment back to the original account and expenditure general ledger code used when the cash advance for expenses was requested.

    This is NOT classed as income and the income general ledger codes (beginning 5****) should not be used. This money can be credited back to a cost centre or a research or non-research project account.

    VAT code XX should be used as no supply has been made to a customer.

    NO? If the payment doesn’t meet the criteria of one of the other Rs then it should be handled as income.

  2. Is this a Refund of an overpayment made by the University to a supplier?

    YES? Then it is OK to credit the payment back to the original account and expenditure general ledger code used when the purchase was made. It is more usual for a supplier to offer a credit note but occasionally we will be entitled to a cheque or bank transfer as a refund for overpayment.

    This is NOT classed as income and the income general ledger codes (beginning 5****) should not be used. An expenditure general ledger code should be used to credit the money back to the University. This money can be credited back to a cost centre or a research or non-research project account.

    VAT code XX should be used as no supply has been made to a customer.

    NO? If the payment doesn’t meet the criteria of one of the other Rs then it should be handled as income.

  3. Is this a Reimbursement by the partner or spouse of a member of University staff for their travel and/or subsistence costs?

    YES? Then it is OK to credit a cheque or cash back to the original account and expenditure general ledger code used when the purchase was made.

    This is NOT classed as income and the income general ledger codes (beginning 5****) should not be used. An expenditure general ledger code should be used to credit the money back to the University. This money can be credited back to a cost centre or a research or non-research project account.

    VAT code XX should be used as no supply has been made to a customer.

    This does NOT apply if the reimbursement is received from an external organisation to contribute to travel and/or subsistence costs for a member of University staff. If the payment is from an external organisation then it should be handled as income.

    NO? If the payment doesn’t meet the criteria of one of the other Rs then it should be handled as income.

  4. Is this a Reimbursement by a member of University staff for their personal travel/subsistence costs or other expenses?

    YES? Then it is OK to credit a cheque or cash back to the original account expenditure general ledger code used when the purchase was made.

    This is NOT classed as income and the income general ledger codes (beginning 5****) should not be used. An expenditure general ledger code should be used to credit the money back to the University. This money can be credited back to a cost centre or a research or non-research project account.

    VAT code XX should be used as no supply has been made to a customer.

    This does NOT apply if the reimbursement is received from an external organisation to contribute to travel and/or subsistence costs for a member of University staff. If the payment is from an external organisation then it should be handled as income.

    NO? If the payment doesn’t meet the criteria of one of the other Rs then it should be handled as income.

    Examples of staff Reimbursements to the University:

    • personal contributions to University telephone/photocopying costs
    • personal contributions to expenses originally charged to University Corporate Cards
    • voluntary personal contributions to tea/coffee expenses paid by the University in the first instance.  This excludes the sales income generated by departmental tea/coffee bars & cafes (ie where a set price per item exists and not a weekly/monthly voluntary personal contribution)
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Need Help or More Information?

Who to Contact
If you are in any doubt about whether income is subject to VAT or which VAT code to use contact the Tax section for advice and guidance before completing your documentation or visiting the cash office.

Contact the Income Office for advice and guidance on paying in income, petty cash and cash advances.

For guidance on handling your income, setting up new project accounts and raising Sales Invoices contact the Finance Manager for your Academic Department or Professional Services Department or the Research Finance.