Tax Rebate on redundancy payment?

JPA61

I am hoping to be told I am being made redundant in a few weeks. I do not intend to look for work (or claim Jobseeker's allowance) before the start of the 2010/2011 tax year, and in all likelihood not before the start of the 2011/12 tax year.

Q1: Will I be able to claim a rebate (form P50) of the tax I will have paid on my redundancy payout for the year I am not working (before I hand my P45 to my new employer)?

Q2: If I can't reclaim tax, does it make any difference that my PILON covers well into the 2010/2011 tax year?

Q3: If I only intend on working ad hoc short-term contracts until I retire will I be counted as self employed? and what do I do with the P45 if I do not intend to be on a permanent employee contract?

kellyash1

hi, for redundancy payments under 30k, you won't pay tax or ni. try the HMRC website and search for the redundancy factsheet


K

JPA61

Thanks - I've done a fair amount of research and read up on the HMRC site - but it isn't specific about this - just vague inference. (btw under my T&Cs I get £45K tax free).

getmore4less

AIUI tax is due the year the money is paid.

So to mitigate the tax on the excess over £30k you can get it paid in the following tax year.

Not sure if you can delay PILON.

There is the risk that the company cannot pay it later.

How can you get £45k tax free?

amanda40

getmore4less wrote: »

AIUI tax is due the year the money is paid.

So to mitigate the tax on the excess over £30k you can get it paid in the following tax year.)

Is this an option for most people that are being made redundant , would you get the £30,000 tax free both years? Or just the first year but full years allowances to utilise the following year?

Thanks:beer:

JPA61

getmore4less wrote: »

AIUI tax is due the year the money is paid.

So to mitigate the tax on the excess over £30k you can get it paid in the following tax year.

Not sure if you can delay PILON.

There is the risk that the company cannot pay it later.

How can you get £45k tax free?

Delaying payment won't be an option. It doesn't seem morally right to get stung for 40% tax on the taxable portion of the payout when I have only ever been a basic rate tax payer and never claimed off the state.

I am going to try claiming on a P50 in the next financial year and see what happens.

I get 45K t.f. because I have reserved rights from when I was a Civil Servant many years ago.

amanda40

If you pay 40% tax when you receive your payment - the chances are if you dont take up further employment this tax year then you may be due a refund come April. If you sign on to receive JSA conts then you would give P45 to job centre as it is classed as taxable too. My hubby is in same situation and also Ex Civil servant who tuped over. We are hoping to hear in next week or so.

PaulDucksbury

JPA61 wrote: »

I get 45K t.f. because I have reserved rights from when I was a Civil Servant many years ago.

I'd be interested to know if thats written down anywhere ? and does it apply to people transfered out of civil service under TUPE ?

thanks

amanda40

Yes I would be interested to find out more about that too - Hubby tuped out of Civil Service 4 years ago.

JPA61

Was going to post a ling but as a new user this is blocked - so Google csps "April 1987" mobile tax and find link "[PDF] Civil Service Compensation Scheme (CSCS)" (should be second result) document ERRC06)159508_tcm6-1851.pdf. My redundancy quote bears this out.

Compulsory Early Severance
"If you are aged between 40 and 49 and were serving in a mobile grade on 1 April 1987 you may be entitled to special arrangements, called reserved rights. You should contact your pensions administrator for further information.

Compensation lump sums are free of tax up to £30,000. There is a further tax-free element in addition to the £30,000 limit, in the extra lump sum compensation paid to members who have reserved rights to the pre-April 1987 terms. Your tax office can advise you further."

JPA61

I've been trying to research the finer details of PILON. I know my PILON is taxable, but it covers the period December 2009 to June 2010. Does anyone know whether, as it covers a period in two tax years, whether some of the amount is actually taxable according to the amount earned in the next tax year, or is all of it based on the amount earned in the tax year in which the payment is received? There seems to be little information on this on the web.