We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Offsetting Redundancy Tax...

Hi guys,

I am hoping to start my MBA at the end of August... course fees i owe will be approx £16,000, which I will already have paid 50% tax on (therefore effectively "costing" me £32K).

A question for the tax folks out there...

If my company were to knock £16k off my redundancy payment and pay this direct to the business school, as a gift, scholarship or whatever, would this be a reasonable way of avoiding the tax???

Thanks in advance, either way...

Scoob

Comments

  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    I don't think they can do that it is still BIK that is taxable.

    you must be getting a massive payout to hit £16k worth at 50%

    total for the year redundancy including income needs to be in excess of £195k.
  • Scooby_Drew
    Scooby_Drew Posts: 37 Forumite
    "total for the year redundancy including income needs to be in excess of £195k. "

    Really?

    I'll be honest, I'm getting nowhere near that... I was under the impression that the first 30K is tax free, then the next £2917 is @ 20%, the next £9583 is @ 40% and the remaining amount is 50%.

    I earn less than £35K and am getting approx £60k package.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    You have been misled if that's what someone has told you.

    You have to earn a total of £150k before 50% tax kicks in for the year.
    http://www.hmrc.gov.uk/rates/it.htm


    It will look like it is taxed higher but that is reclaimable.

    look up P50 for one way to do this.

    Will depend on exact amounts
    £35k April til Aug is 5 months so £14.5k + £30k you will end up paying 40% on about £2k the rest 20% or less.
  • Scooby_Drew
    Scooby_Drew Posts: 37 Forumite
    Thanks for that... I was under the impression the rules on redundancy had changed.
    http://www.mulberryfinch.com/news/50-percent-redundancy-tax/

    Now I'm really confused...
  • Scooby_Drew
    Scooby_Drew Posts: 37 Forumite
    Right, M4L... I think I understand a bit better now...

    I was told (albeit by a non-tax expert!) that the redundancy tax was separate to income tax and not off-settable.

    So basically, my entire tax liability for the fiscal year (as I won't be earning a penny more in 11/12) will be around £9K or so inc my (small) bonus etc??

    Phew... that's a massive weight off my mind.

    Do you know if students can still fill in a form to get the tax back early, or will I have to wait until the end of the tax year? (I fill in a SA tax return myself anyway).
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    see of a P50 works look up on hmrc might be worth just filling one in anyway.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 346.2K Banking & Borrowing
  • 251.2K Reduce Debt & Boost Income
  • 451.1K Spending & Discounts
  • 238.2K Work, Benefits & Business
  • 613.4K Mortgages, Homes & Bills
  • 174.5K Life & Family
  • 251.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.