Voluntary Severance - tax implications of temping for former employer

nealben76

At the end of 2009 I took voluntary severance in order to pursue a career change. I received several thousand pounds tax free as part of my settlement, which was paid to me in January this year.

After a period of unemployment and in full time training I will be starting a new job in my chosen career in September, but will be not doing much for the summer. A colleague at my former workplace has told me she can give me some temporary work for the summer. However, the HR dept there strongly recommended that I don't work there from a tax point of view, as it may affect the tax efficiency of my severance payment, and may not be looked at favourably by the tax office.

Does anyone know if this is true? What does this mean in more detail? Does it basically mean the Inland Revenue would take all of my wages to pay for the tax I didn't pay on the severance payment?

Does the fact that my severance payment was made in the previous financial year make any difference?

I'd really like to be able to take this work as I can do with the money, but don't want to end up just working for the tax man! Any light anyone can shed on this would be gratefully received!

Thanks

Ben

getmore4less

People do this all the time.

As long as the redundancy was genuine(to quailfy for the tax free status it should have been) there should be be no tax implications.

You can return to the same job almaos imediately and it still not have any tax implications if it can be shown the redundancy was genuine and that there is now new work available(say from a new contract).

Ask HR for the legislation and tax reference(on HMRC) that covers there clam so you can look into it, chances are they won't have any.

You can also ask your local tax office(usualy very helpfull) for clarification.