Confused by Tax implications for redundancy

mackers

Hi, I'm desperatley seeking advice, I have been made redundant and will leave my company at the end of Feb, I am getting a payment of £55k.

I have been told that the first £30k is tax free, this will be paid to me in mid March, the remaining £25k will have £5k deducted for tax and the remaining £20k paid into my account shortly after, this seems straight forward enough but the info I have been given also says I may be liable for more tax in the future???

To add to this I have been advised that this money will be added to my total income this year 2010-11 and if I get a new job I will be in a higher tax bracket so will have to pay 40% tax, is this correct? someone else has advised me not to get a job until after April which means this money will not be taxed??

Confused! any help gratefully received!

getmore4less

£30k tax free the rest is counted as income in the year your get it.

If the total goes over the 40% threhold there will be some 40% tax

since they are only taking 20% you may be liable for some more tax.

Contribututions JSA is also taxable as will any other work in this tax year.


How much will your total earning forthe year be at termination date.

Don't forget they need to pay for any outstanding holidays.

The second advice(it wont be taxed) you have been given looks wrong, depend on the numbers.

mackers

Thanks getmore4less! bit clearer!
At termination date I would have earned £33k
On the subject of holiday I have been told I must take all outstanding holiday before I leave, this also gets confusing as I am given 24 days holiday from July-June I have 6 days left from that entitlement but have been told that I accumalate these days at roughly 2 per month and as I leave in Feb I would only be entitled to 16 days so have technically taken to many!!
Also how do I stand on time off for interviews etc? my boss says its at his discretion, is this true?

Sorry to go on!

getmore4less

40% kick in at £43875

So £33k + £25k involves tax at 40%

Don't forget other income from savings

Pension contributions attract relief at the highest rate.

Some basic tax investigation is needed
http://www.hmrc.gov.uk/incometax/basics.htm

Holidays I need a think, it's late

jazzyman01

You would only be able to claim for holidays that you have accrued. As you will be leaving before the end of the holiday year you will only be entitled to the portion up to the date of leaving. This means that any you have taken over is likely to be deducted from your final salary payment.

Yes, you have a right to reasonable time off to attend for interviews etc. Your employer might want to see evidence.

getmore4less

Ok thholidays get a bit more complicated.

Assuming you are full time 5days(or more)

The 24 days is below the statutory minimum of 28 so they probably give you bank holidays as well making a total of 34.

One approach is to prorata the full entitlement 34 * 8/12 is 22.67 days

But you will have probably have had 4 BH aug,Xmas,BD,NY, leaving 18.67

Which is enough to cover the 18 days taken.

Because 34 days is more than the statutory minimum they can calculate the holidays differnetly there are no specific rules for the excess 6 days.

See if they go for his prorata approach.

mackers

Bit clearer now, I've been told today that I can go for interviews etc when I want, which is good.
Also had a thought, I currently have shares in the company that have been given to me as bonus's I was keeping them for 5 yrs to avoid tax so was wondering what happens to them?