Redundancy and Tax

Ailsb

Hi, I hope someone can help me with regards to the tax that I've paid on my redundancy payment and that I will pay during this tax year.

I have recently been made redundant and received my redundancy pay a week ago. My P45 has arrived today with a covering letter that says "any payments made after your leave date will be taxed at basic rate month1. If ta the end of the tax year you are a higher rate tax payer it will be your responsibility to notify HM revenue & Customs."

My P45 shows total pay to date as £35,860. I was taxed at 40% on my redundancy over £30,000.

I am in a very lucky position of having a part time job that I am due to start next month (not sure of the actaul satrt date yet). My salary for the 10 months to next tax year is £11,250. I am claiming Job Seekers allowance until this job starts so likely to get 3 weeks worth of this. So my total income for 2010 - 2011 will be approximately £47,300.

How does the tax actually work?

Will I be taxed at 40% on my new salary until the end of the tax year and have claim back any overpayment of tax from my redundancy (not sure if I can claim any back). Or will I be taxed at 20% and then have to pay any overpayment back.

I am realy confused as to what happens now and any help would be most appreciated.

fengirl_2

If you give your P45 to the Benefit office, they will operate PAYE on your JSA plus you pay and then give you a new P45 when you sign off. This should be given to your new employer and by the end of the tax year you will have paid the correct amount of tax. That is the function of the P45.