reclaiming tax on a redundancy settlement

simonsheffield

I received a significant redundancy settlement in April of this year. I have been privileged to earn a very good salary (approx 115K) which meant I was on a tax code that gave me no tax allowance and profiled the overall tax bands on a month by month basis; so for example my April earnings were taxed at 20% for one twelfth of 35K and at 40% for one twelfth of 115k etc; with the majority being taxed at 50%.

My family has been used to a high standard of living and I have tried to significantly reduce my outgoings; note, I used the majority of my redundancy settlement to repay my mortgage.

I am trying to set up my own company with no revenue yet, and am receiving job seekers allowance. I dont plan to pay myself through my company this tax year whilst I set the company up. But as soon as I start making money I will sign - off, or sooner as I will explain.

I have unsuccessfully tried to reclaim my tax overpayment from HMRC despite the fact that I will not earn over £100K this tax year, so I should be entitled to the approx £8K tax allowance and none of my earnings should be taxed at 50%.

However, I am informed that I cannot reclaim my tax overpayment because I am self assessed. But I could get the tax refunded if I sign-off (I couldn't work out why this would be the case). I would prefer not to be on benefits and rather just have the tax overpayment to invest and receive the interest from that.

Having spent much time communicating with HMRC I still find it hard to believe that I cannot have a clear over payment returned to me; I also intend making a complaint that it has taken 5 months to find out that I cannot receive any refund due to a simple ruling which I could have been made aware of at the outset.

Should I have confidence that I will receive a refund after signing off?

I plan to get in touch with CAB but any information or advice would be gratefully received.

Regards,

Simon

chrismac1

If you succeed, well done! I have asked for exactly this on behalf of 4 clients in the past 2 years and each time they have been declined. If this happens to you:

1. Make sure you get familiar with self-assessment.
2. Get your return in on 10 April 2013 or whenever the database finally wakes up from its slumber from rolling into a new tax year.
3. Put your bank sort code and account number on, so you get an automatic refund.
4. 90% of the time a refund like yours gets blocked. No reason is given, and no attempt made to contact you. When you call them, ensure you don't get off the call without either a promise made to release it - noting the specific person you spoke to and their exact location - or a valid reason why it is being held up.

Be patient this is Jobsworth City Arizona you are dealing with!

simonsheffield

Thanks for the response, I have requested a letter confirming the reason for not getting the refund. The simple reason stated is that it is because I am self assessed - but if it was as straight forward as that why has it taken 5 months of to-ing and fro-ing. It just seems so darned unfair that they can sit on £13,600 of my money for 11 months.

Cheers,