Complicated tax return

bjorn_toby_wilde

I wonder if anyone can help with a complicated tax return.

I was made redundant in January and paid a redundancy payment and PILON. I was advised to opt for self assessment as I might have had too much or too little tax deducted under an OT tax code. My problem is that my final payslip and P45 are hard to break down.

I know I have to separate out the redundancy payment from the pay and PILON and enter it in the additional information pages of the return. My problem is that the company separated out the taxable and non taxable payments on the payslip but the tax is all lumped together so I don't know how much tax I actually paid on the redundancy money.

I could put all the tax in the "pay" section and none in the redundancy section but I'm not sure if that would be right.

Does anyone have any advice on how to fill this in?

Nicola_Ed

Hi

The tax on the paylip will relate to all the taxable income. The non taxable income has not been taxed. PILON's can be taxable and non taxable, but the former is more likely. The redundancy is likely to be tax free. Is all the redundancy you received not shown as non taxable? Did you receive more than £30,000 redundancy?

bjorn_toby_wilde

The PILON was taxable and I got more than 30,000 in redundancy (19 years). The last payslip unfortunately is for one month's salary, three month's PILON and the redundancy lump sum so all the tax is lumped in together. This makes it very difficult to divide out the tax on the taxable portion of the redundancy payment for the tax return.

I could do an estimate (40% of the redundancy - £30k), subtract that from the tax deducted and put it down on the additional info pages. Just not sure if that's the right thing to do.

sweetietot

Does the payslip show taxable pay to date? This shouldn't include the non taxable £30,000 of the redundancy payment

getmore4less

you should not need to worry about which bit of tax goes with which bits.

tax is tax.

the purpose of the self assesment is to work out how much tax you should pay and take of the tax you have paid leaving (+-) due tax/refund

depending on how it was paid some could have been at 50%

ceeforcat

I do not understand the need to separate it out. The P45 details should show all your taxable pay, whether PILON, redundancy or basic. It should not include the £30000 tax free element of your redundancy. This taxable pay is what is to be entered on your employment sheet. (I think that is what Nicola Ed above was also stating).

bjorn_toby_wilde

I guess i wasnt very clear in my explanation.

The self assessment form has a section for pay and a section in the 'additional information' section for redundancy payments and lump sums. If I enter the redundancy payment in this second section (which is where it clearly should be) then I have to also enter how much tax was deducted. I can't do that because the tax isn't separated out on my P45 or my payslip.

I take the point that "tax is tax" so maybe it doesn't matter where it goes provided that the overall income and overall tax paid are correct. Just trying to get it right:)

Also, to complicate things, my 'non taxable income' on the final payslip is £29,641 which clearly can't be right if £30k is tax free!

Sambucus_Nigra

Are you self employed?

If not, who advised you to do this?

bjorn_toby_wilde

No I'm not self employed.

The company I worked for paid for independent financial advice for all of us. Can't remember the name of the organisation but they were a well known financial company. The adviser said that because we would all be taxed on OT codes and also paid sales bonuses after our P45s were issued, the chances of us having paid the correct tax would be slim.

She advised us to opt for self assessment and bank some money in case we ended up with a tax bill.

System

Unless your total taxable income was over £100K I wouldn't bother to register for self-assessment and submit a tax return. Just send a letter with copies of your P45's, P60's etc and details of the redundancy and have it assessed under PAYE - http://www.hmrc.gov.uk/sa/need-tax-return.htm

bjorn_toby_wilde

My income was over £100k if you include the redundancy payment so I have no choice but to complete the self assessment.

If anyone can advise on the question I asked rather than querying whether I actually need to complete the form or was correctly advised I'd be very grateful. I'm not trying to be difficult but I'm looking for help from somebody who understands the self assessment form if possible.