Redundancy - Tax Question

titusbungle

I am taking voluntary redundancy from my job. I am trying to calculate how much I am going to be taxed - I usually use listentotaxman, but when I put the amount in it calculates it as if it's a standard payment and takes a huge amount off me!

Here's my details if anyone can help!

Tax free severance - £15000

PILON inc bonus etc - £8000

My basic salary is £25k and my OTE is an extra £7k usually, my end date is 30th September and the payment will be made in October. I also pay a student loan payment, if anyone can help direct me to where I can calculate what I'll have after tax I'd appreciate it! :j

anamenottaken

titusbungle wrote: »

I am taking voluntary redundancy from my job. I am trying to calculate how much I am going to be taxed - I usually use listentotaxman, but when I put the amount in it calculates it as if it's a standard payment and takes a huge amount off me!

Here's my details if anyone can help!

Tax free severance - £15000

PILON inc bonus etc - £8000

My basic salary is £25k and my OTE is an extra £7k usually, my end date is 30th September and the payment will be made in October. I also pay a student loan payment, if anyone can help direct me to where I can calculate what I'll have after tax I'd appreciate it! :j

PILON - is it in your written particulars of employment that your employer can pay PILON? If not, is it customary for them to do so? How much notice were you entitled to? How much of it are you working?

titusbungle

anamenottaken wrote: »

PILON - is it in your written particulars of employment that your employer can pay PILON? If not, is it customary for them to do so? How much notice were you entitled to? How much of it are you working?

My notice period is three months and the PILON payment is from the 1st October - I thought it was quite generous too! I have had it checked, double checked and again through HR and it is correct!

anamenottaken

titusbungle wrote: »

My notice period is three months and the PILON payment is from the 1st October - I thought it was quite generous too! I have had it checked, double checked and again through HR and it is correct!

Does that mean that you are working up to 30 September (say 6 weeks from the time of the agreement of the voluntary redundancy)? If so your PILON payment would be for 7 weeks. Is that what they are saying?

Again, I ask, is the employer's right to pay PILON included in your written particulars of employment or is it otherwise something which your employer does by custom?

getmore4less

Subject to no workaround for the PILON if not contractula or custom they can pay it tax free BUT that can be at the net rate anyway so you are no better off.

check what they are going to pay and if they are taxing it.

The problem is this will be taxed like it was income for that month so you will get overtaxed for the year and need to claim/claw it back. Exactly how much will depend if it is before or after the p45.

This will sort itself out if you get another job, but JSA won't be enough to fix it in the year so a tax retrun/reclaim would be needed.

The alternative option is a P50 but this can take time.


If you work on 42%(high rate) it should be less than that and in the end probably around 32%(low rate).