Redundancy and Tax

getmore4less

vickk wrote: »

Many thanks for all your help, things are much clearer on the tax front. When I have more details I will have questions on my pension situation but would probably be better put in the pension section.

Briefly to answer previous question it is a final salary scheme, not index linked (rises at discretion of trustees). As of jan I paid in 40 years and reached max benefit if drawn at 65 but 4% reduction per year if taken early.

I have asked for my figures if taken in May and a projection if left till 60 (I will not leave it any later than 60 but unsure if I should take it now)

Rough estimate if taken in May would be 75K tax free and 15k pension or 21k with no lump sum although that is based on figures from 12 months ago so will be higher now.

If not Copper bottomed then get advice I have seen too many pensions go down(one of mine)

Lack of index linking is a long term issue
Lump sums are a pain to invest in a tax efficient way

£6k pension for a £75k lump sum at 57 is 12.5 commutation.
I think that might be quite good(taking the pension).

Pension board next stop

get advice, opinion from experience is of limitied use if it don't match

vickk

getmore4less wrote: »

Your employer may tax you at 40% for some of it but you just claim that back by taking a month off.

Don't sign on for a month and put in a P50 and you will get a refund.
Your tax code reset(new P45) for the next job/JSA if you dicide to claim.

http://www.hmrc.gov.uk/incometax/stop-work-refund.htm

http://www.hmrc.gov.uk/pdfs/p50.pdf


If you sign on immediately you can't do this.

would a month off give me back all of the tax paid at 40% or just part of it. My final pay (not counting the tax free portion) will be 23K and I expect about 8K tax on that 4K of that from the 40% bracket

fengirl_2

You will get part of the 40% back as the tax tables even out the tax due over the course of a tax year.

vickk

fengirl wrote: »

You will get part of the 40% back as the tax tables even out the tax due over the course of a tax year.

Thank You,

So if I wait 8 weeks to claim I would get more back?
Is there any way to calculate how long before all the 40% tax would be due back?
If I decide to take a year off and tick that part of the P50 I assume I would get it all back but what happens several months down the line if I get a job offer to good to turn down?

vickk

Hi Fengirl, Thank you for your previous help with this question. You seem well informed on this subject so I am hoping you can help me out with this as there has been a new development.

I have been offered some limited work from Sept. It is 150 hours (about £3000) spread from sept to end March and is broken down to 50 hours in sept 50 in dec and 50 in march and will be paid in 3 payments not monthly.

The company say that I will be taken on a temporary contract and if I have no other employer I can give them my P45 and they will operate paye for me.

If I do this, will I get rebates on the 3 pay days or what else would happen?

or Should I submit a p50 on June 21 (4 weeks after leaving my job) for a rebate in the hope that the tax office issue me with a new p45 before sept as I see from your comments on other threads that the tax people have a 7 to 9 week backlog?

anyone else with any input then feel free

mackemdave

Ive just been sorting out my tax on a redundancy payment I got in April 09....I received my P60 in the week from my previous employer.I have not worked since I took the redundancy last year and sure enough my ex employer had taxed the paymeny at 40%.I rang the tax office this morning and they looked at the figures and said that I had been over taxed by around £6K which they said will be refunded in the next 28 days...

Nice little earner there

vickk

I would just like to say thanks to all who have replied to this thread but I must mention a special thanks to Fengirl who has given her time to offer such detailed good advice and information.
:T:T:T:T:T:T:T:T:T:T:T:T:T:T:T:T:T:T:T:T