Tax Rebate on redundancy payment?

fengirl_2

Tax is always payable in the year in which the income is received, not the year in which the income is earned. Its called the receipts basis.
To go back to youor original question, if you are not working or claiming JSA when you leave work, you can complete a P50 and reclaim the tax overpaid...you need to wait 4 weeks and claim again 4 weeks later until the end of the tax year. If however you get a short term contract at any point, then you give the P45 to your new employer and he will make any refund due. Short term does not mean self employed.

JPA61

I've decided to take up the offer of putting my PILON (6 months) into my pension - meaning it will be tax- and national insurance-free, and my employers will be matching the amount - meaning a year's salary going deduction-free into my final salary pension pot. Of course it being NI-free I expect I will suffer a reduction in my state pension when that comes.

JPA61

fengirl wrote: »

...you need to wait 4 weeks and claim again 4 weeks later until the end of the tax year.

But what about the next tax year (given that redundancy payment is for loss of future earnings lost through severance, and that I would be unlikelt during that employment to ever get into the 40% tax bracket - yet I would be paying 40% on the majority of the redundancy payment, which I would not be if it were earned over a number of years)? Other countries (i.e. Irish Republic, New Zealand and Germany) recognise the 'loss of future earnings' status of severance payments and have mitigation where a person is placed into a higher tax bracket through severance - if the UK doesn't then it is another indication that tax is there to penalise the taxpayer rather than to pay for the provision of a service.

THRIFTY_GIRL

JPA61 wrote: »

Of course it being NI-free I expect I will suffer a reduction in my state pension when that comes.

Get yourself a pension forecast. You can make voluntary contributions if necessary (about £12 per week I think). However, this should only be necessary if you have substantial gaps in your NI record.

JPA61

I've been looking into this since I posted that. The regulations have changed recently, so that whereas previously 44 years had to be paid in for a full state pension, now those who will reach state-pension age after a certain date (as I will) only need to contribute 30 years - which I have already done.