Self Assessment, how do I fill in ..?

router_2

Hi,
Just filling in the SA form online and thought it would be straight-forward. However, I had a situation in Feb 2008 where I started a PAYE job and after a week realised the job wasn't for me as the employer hadn't quite told me the truth. I resigned and according to my contract I was paid a sum of money - equating to that months salary but viod of tax deductions. Now I am told that as long as it under £30,000 (which it is) and it's in my contract then I don't have to pay income tax on it (hence why the employer paid it gross as compensation). There is nowhere on the SA form to write this in and if I include this amount, the tax calculator says I owe the money. Is there anyone who might know what I can do to declare this as I don't want to leave it out and be caught out later. Just for the record I don't have the money to pay for it even if I did owe it.

thanks.

CLAPTON

Only guessing but
It would seem to me that your employer didn't tax you because you earned under PAYE less than the personaL allowance ie. 5225.
However this money is taxable and should be declared.

The only non taxable payment would be redundancy but I can't see that being the situation from what you have said

Paul_Herring

The only £30,000 that I know of that is 'tax free' is redundancy pay.

Who told you it needn't be taxed? Your ex-employer? There's no way your 'contract' should be able to prevent HMRC from collecting tax.

Sounds more like they fobbed you off so they didn't need to fill out any paperwork for you.

To answer your question, I'd either include it as is, and pay the tax due on it, or alternatively, include the full situation in the notes section(s.)

You may have the option on the form (if it's not too much) to have a P2 correction applied to your tax code for the next tax year to pay the due amount (I'm assuming you're still in work,) or you may be able to defer the payment if it's due Jan 31st: http://www.nicklins.co.uk/cgi-bin/item.cgi?id=24705&d=601&h=160&f=260

router_2

Hi, thanks for the heads up on that. I thought the company's 'mistake' was deliberate too as well.. if I had left it, no doubt HMRC would remove my legs or some other suitable punishment if they inquired later, plus all the penalties and interest due. I'm going to HMRC today to discuss it further (phone lines have been busy for some reason!!)

Thanks again.

SUPERJULES

router wrote: »

Hi,
Just filling in the SA form online and thought it would be straight-forward. However, I had a situation in Feb 2008 where I started a PAYE job and after a week realised the job wasn't for me as the employer hadn't quite told me the truth. I resigned and according to my contract I was paid a sum of money - equating to that months salary but viod of tax deductions. Now I am told that as long as it under £30,000 (which it is) and it's in my contract then I don't have to pay income tax on it (hence why the employer paid it gross as compensation). There is nowhere on the SA form to write this in and if I include this amount, the tax calculator says I owe the money. Is there anyone who might know what I can do to declare this as I don't want to leave it out and be caught out later. Just for the record I don't have the money to pay for it even if I did owe it.

thanks.

Did you get a p45- if so was the payment on there-if it was then it is taxable you should be able to tell. if not then give hmrc a call they should have the details from your previous employer and will be able to give you the correct info and advise you what to do.

Paul_Herring

SUPERJULES wrote: »

Did you get a p45

Given the information supplied, I'd be very surprised if he did. (He should have had one though.)

mrsmyagi

Actually you can receive a £30k termination payment (it's not necessarily related to redundancy) tax-free although it has to meet certain conditions.

It has to be non-contractual (ie not written in your contract) and therefore a discretionary payment of damages for losing your job. In your case it seems like a normal payment in lieu of notice (PILON) which isn't exempt. There have been quite a few high profile cases on this and HMRC will really fight you so I suggest you get some good accountancy advice as you may have a fight on your hands