Taxable Payment?

iammikec wrote: »

Hi

I was made redundant before Christmas and during my consultation I was offered more than statutory redundancy - I had worked for the employer for a few years and they felt bad about closing the business.

Would the amount over and above statutory redundancy be taxable? No, it is the amount above £30K which is taxable.

I have read that you can receive up to £30,000 of redundancy pay tax free and that the maximum amount of statutory redundancy is capped at £13,920 - this appears to confirm that you could receive additional discretionary payments of £16,080. The discretionary (or contractual) payment can be any amount and would generally be considered as including the statutory sum. Of course, not everyone can receive the maximum statutory redundancy payment because that requires someone to be paid at the maximum weekly pay and have the longest service.

I have just been contacted by this previous employer to say that their accountant is saying that the additional payment is a benefit in kind ("benefit in kind" is not a cash sum so I cannot imagine any professionally qualified accountant referring to money as a benefit in kind) and should be taxed as such. Some employers will deduct tax (and NI) in order to protect themselves from any chance that HMRC will classify it as having been a normal, but delayed, payment for your actual work and therefore look to them to hand over the tax and NI which would be deemed to have been deducted. I think you can try to seek repayment from HMRC.

Are they right? I think you should get them to put in writing exactly the grounds they are using as justification for it being taxable.

Thanks

Mike

enginesuck wrote: »

My redundancy in 2012 was over 80 k - none of it was taxed it was made as a "special capital payment" Not sure if that makes any difference.