Voluntary Redundancy Tax Qus

alisnood

Hi all,
I earn a little over 30k a year and am in the lower tax bracket (20% IIRC)
I have just accepted VR after 7.5 years of service.

My company policy is 8wks for every year + 1/12 of 8 weeks for each month for part years. All in i recieve circa 60wks pay. In addition i will also recieve 6months PILON.

The package is made up of 2 elements:

1 compensation circa 36k
2 PILON, circa 19k

I understand that i will be taxed only on the remianing 6k form the 30k compensation and that the whole of the 19k will be taxed and NI deducted.

Questions:

Are my assumptions or understandings correct?
When will i be taxed on these components?
Will the tax man use standard NI rates and my normal 20% tax rate?
Will the tax man take more than he is due and expect me to claim it back at the end of the year thus robbing me of the freedom to earn from investment?

I have earnt 7k this FY. If anyone can calculate what is likely to be taken and when i would be very grateful.

Cheers

Ps. why is the tax man.....a man?

fengirl_2

PILON is not taxable unless it is in your contract, is this the case?
Otherwise, it looks as if you will be a BR taxpayer this year.

PS there are many many tax women and I used to be one.

alisnood

fengirl wrote: »

PILON is not taxable unless it is in your contract, is this the case?
Otherwise, it looks as if you will be a BR taxpayer this year.

PS there are many many tax women and I used to be one.

I believe that PILON is taxable for me i.e. in my contract:(

When and how will the tax which i owe me deducted from my redundancy package which should be paid 31st July?

Thx

CLAPTON

you will be entitled to 30k tax free as long as the compensation is not contractual and you will be taxed on the remaining 25k normally

i.e. you will pay tax when you receive it ... the amount of tax deducted depends which month you get it and your previous earning / tax..

NI will also be 'normal' i.e. 11% between 453 and 3337 per month and 1% thereafter

If you don't intend to work again this year, then your total taxable pay will be 7+25 = 32k (plus saving interest / dividend etc) which if below the 40% band you will be able to reclaim any excess tax.

NI is a monthly tax so you will not be charged any extra

cheli

Hi to all,can some help please? I have taken voluntary redundancy, i have worked for my employer for eight years and will recieve the maximum weekly limit of £350.00, 8 weeks +4 totalling to12 weeks pay all in. I will receive a week and a halfs pay for each complete year of employment totalling to £4,200 + i will recive any holiday pay on top of this which i may be entiltled to. Can anyone tell me if i will be taxed on the lump sum of 4,200? As i'm very confused...

jonesMUFCforever

cheli wrote: »

Hi to all,can some help please? I have taken voluntary redundancy, i have worked for my employer for eight years and will recieve the maximum weekly limit of £350.00, 8 weeks +4 totalling to12 weeks pay all in. I will receive a week and a halfs pay for each complete year of employment totalling to £4,200 + i will recive any holiday pay on top of this which i may be entiltled to. Can anyone tell me if i will be taxed on the lump sum of 4,200? As i'm very confused...

No you will not. The first £30k of redundancy pay is tax free.
If you are taxed at source when you receive the payment phone the tax office for the procedure to reclaim the tax.