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Redundancy Tax question
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Iguana
 


Member Since: 14 Oct 2013
Location: 'Sunny' Zomerset
Posts: 9402

Ukraine 
Redundancy Tax question

Hi all,

My last day at HP will be 31st March, as I am being made redundant

I will receive a redundancy payment over the £30k tax free payment level, so I know that the 1st £30,000 will be Tax free and the remainder will be taxed

I will though physically receive my payment in the New 2019 Tax year, around the 28th April, and as I will be by then unemployed will I somehow be able to use my £12,500 personal tax allowance for the taxable part of my redundancy payment?

So as an example, If my redundancy payment is £40,000 - £30k tax free, leaving £10k - can I also get this tax free as it is below my personal allowance level?

I hope the question makes sense Laughing If my assumption is correct, how does work in effect, or do I have to speak with the tax office before payment?

Thanks in advance (as usual Whistle )

Iggy
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Post #203208426th Feb 2019 12:53 pm
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stew 46
 


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I’m guessing it would be tax free and you will fill in a tax return for 2019-2020 when that time comes
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Post #203208626th Feb 2019 12:58 pm
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ianm27
 


Member Since: 02 Jun 2016
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It will depend on when the payment is declared, not when it is paid.

If the termination payment is reported in 2018/19 and your P45 shows leaving date as prior to 5 April 2019, then the answer is no. You may be entitled to a repayment of over deducted PAYE but that will depend on your total taxable income for 2018/19 and you will need to complete a Tax Return or form P50.

If the termination payment is declared as being in 2019/20 then the answer is still no, but.

The PAYE system is only able to use 1/12 of your personal allowance each month. So if the payment is declared in April 2019 (thus falling within the 2019/20 tax year) then you will be entitled to 1/12 of the tax free amount allocated against the payment.

Once you receive your P45 it is possible to contact HMRC and request a repayment of the PAYE tax deducted by declaring that you will not receive any further taxable income in the next 4 weeks and completing form P50

https://www.gov.uk/government/publications...orking-p50
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Post #203208826th Feb 2019 1:08 pm
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Iguana
 


Member Since: 14 Oct 2013
Location: 'Sunny' Zomerset
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Ukraine 

Bow down Bow down
 Iggy/Ieuan

Current LR =
2015 RR Sport Autobiography
&
1992 Land Rover Defender Camper

- Gone but not forgotten:
MY10 D4 GS
MY05 Disco 3 'S'
MY14 FL2 HSE manual in Blue
MY15 Disco 4 HSE Lux in Santorini Black
MY08 Disco 3 SE manual in Buck Blue
1960 Series 2 88" (No idea why I sold it!) 
 
Post #203212826th Feb 2019 4:10 pm
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riverblanche
 


Member Since: 31 Aug 2010
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Hi,
not questioning the above ^ just from my experience following redundancy about 3 years ago
taking a bit above 30k initially I was taxed on it (the bit above 30 that is)
then
end of that tax year total earnings (couple of months pay + the above redundancy) less than yearly allowance and a refund of tax Thumbs Up

couple of side issues, depending what your work/income options are going to be
(I did none and had none, all planned Whistle )

transferring any married persons allowance

and

if No/low income, energy providers gov scheme for winter allowance £150 credited (not all providers do it)

just a thought.
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Last edited by riverblanche on 26th Feb 2019 10:38 pm. Edited 1 time in total 
Post #203225226th Feb 2019 10:33 pm
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galwaygreen
 


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Think you have to add your wages for that year..then take the tax..40k pay off.....30k wages...tax to pay on 70k..ie some may be high rate
  
Post #203225526th Feb 2019 10:36 pm
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