OT week/month 1 code for red payment? Due money back?

MoneySavingMission

Hello
i am hoping somebody can help me. I was recently made redundant from my employer. My redundancy pay / holiday pay was taxed on a "0T week/month 1 coding. This coding is used for all payments after date of leaving and after issue of P45"

I queried this at the time with payroll manager / employment lawyer and both are under the impression that i should be due tax back at the end of the tax year once year end reconcilliations are complete. It is worth pointing out that i was on smp and zero pay smp for the duration of the current tax year. I seem to have paid about 35% tax which i dont understand as i've obviously not used any of my personal allowance.

Please advise

chrisbur

Impossible to say for certain without knowing the P45 details, the redundancy details, and what you expect to earn or recieve in taxable benefit by the tax year end.

MoneySavingMission

Redundancy straight on the back of SMP. Assuming i do not work until the new tax year surely i would be entitled to some kind of tax refund?

CLAPTON

It's likely but without knowing the actual numbers it's impossible to say.

chrisbur

MoneySavingMission wrote: »

Redundancy straight on the back of SMP. Assuming i do not work until the new tax year surely i would be entitled to some kind of tax refund?

Assuming that you have no taxable income between now and the year end or that any taxable income (eg taxable benefit) you have is lower than the remaining tax allowance then you will be due some kind of a tax rebate.

jimmo

The use of code OT, month 1 basis, for payments after leaving is relatively new and was intended to ensure that people in your position don‘t underpay.

Therefore it is very, very likely that you have overpaid and will be entitled to a refund.

However, from scribbling on the back of a fag packet, I reckon that if you paid 35% tax on the whole of your redundancy payout, your gross payout will have been somewhere between £100,000 and £110,000.

If that is accurate, people wiser than me will probably be able to advise you about things you can do to mitigate your tax liability before the year end.

If it is not accurate you may need to consider whether you have been overtaxed and what you can do about that.

In any event you may be able to get your hands on a significant proportion of the overpaid tax before next April by making “Unemployment repayment” claims to HMRC using form P50.

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=1CVVZ8XMWiI&formId=764

It would be a lot easier to advise you if you are prepared to share the figures.

MoneySavingMission

i wish - he he.
I received a redundancy payment which a large proportion was tax-free. I was then taxed on 2months notice period/ holiday pay/ accrued bonus etc at a level of about 35% tax.

This came on the back of SMP where I had zero earnings following 39 wks of SMP payment. Based on the figures from start of tax year i've earned much less in SMP than i paid in tax on that final payslip / p45.

So can i raise this with the tax office now? Employer seemed to indicate i had to wait until year end reconcilliations to claim this back but i could do with it now!

bigmatt1174

Speak to the HMRC - they will have your figures and tell you if you are in a position of over or underpaid tax. I did this recently as I took redundancy and it made me a 40% higher rate tax payer - I then got the HMRC to issue a cumulative tax code to my new employer and in my second months wages I paid no tax and got a £160 refund! I wish every month could be like that !!!

MoneySavingMission

Why can you not contact HMRC if claiming JSA contribution based benefit whilst job-searching?

MoneySavingMission

anybody know the answer to this?

Savvy_Sue

MoneySavingMission wrote: »

Why can you not contact HMRC if claiming JSA contribution based benefit whilst job-searching?

MoneySavingMission wrote: »

anybody know the answer to this?

This isn't really my area of expertise but ...

Obviously you can contact HMRC while you're claiming JSA. However, as far as I know JSA is paid at a fixed rate, without taking your tax code into account, so you wouldn't get a tax refund via your JSA. And as JSA is a taxable benefit, and related to Job Seeking, HMRC might not give a refund within the current tax year because your full liability can't be known at this stage.

I could be quite wrong about this, so I'd suggest giving them a ring once their offices open and asking them. I'd have thought the enquiry lines might be fairly quiet between Christmas and New year, although again I might be quite wrong about this ...