PILON, Severance, tax, emigration!

poolprouk

Hi There,

Feel a bit guilty posting this as i'm being made redundant soon and am quite happy about it as I'm planning on emigrating to Oz. So being paid to leave is good for a change.

My situation is this:-

Time with employer 6 years (2.5 weeks for each year of service as severance)

Notice period 6 months, will most likely be asked to work 2 months of this so will get 4 months PILON, + i will get paid for the full years leave allowance less any days taken ( i will have 24 left at time of leaving).

Given that i'm planning on emigrating to Australia in Late April i am aiming to agree a leaving date of 12 April. Therefore i will receive my severance + PILON + Leave payment in the 13/14 tax year.

Now it gets complicated.

PILON + Annual leave - Taxable - Given that i will be getting this in the new tax year and moving to Australia soon after i am not sure where my tax liability on this will be, here or in Australia? (I am hoping here as i would benefit from being taxed at a fairly low rate as this will be the sum total of my earnings in the uk for the 13/14 year.) the aussie tax year runs from July 1 to June 30 if that helps?

Severance- This will be tax free of course, however i am worried that the Australian tax man will try and claim a portion, i know there is a double tax agreement but will the Australian tax man treat my severance pay as the UK tax man would?

I should receive both payments mentioned above before i leave the UK and move to Australia (therefore before the date i become a resident of Australia for tax purposes.....i think....).

Any help would be useful. I am guessing i will need to seek professional advice.....

Good luck to those less fortunate than myself, i'll have to find a job in oz when i get out there so i'll be in the same boat eventually.
thanks!

notanewuser

Just to warn you, you'll automatically be taxed as though you earn that amount every month. I had a £22k tax deduction when I was made redundant and it took several months to get the £15k overpayment back from HMRC (in year). There is no way around this.

I can't imagine Australia would have any interest in the payment, provided its all yours before you move??

poolprouk

Thanks, i will contact the tax office and see if anything can be done to prevent my being taxed too much. Perhaps if i declare i am emigrating they will treat me differently.

Cheers!

notanewuser

poolprouk wrote: »

Thanks, i will contact the tax office and see if anything can be done to prevent my being taxed too much. Perhaps if i declare i am emigrating they will treat me differently.

Cheers!

They won't, I'm afraid. They'll want you to wait for self assessment (online) in January 2015, or you can fill in the in year form. There is no way your employer can pay you without calculating the tax this way. It's all designed so that HMRC hold the money for as long as possible. They can't change the rules (not even for very very senior tax inspectors, so in told ).

getmore4less

You will probably need to do a P50.

http://www.hmrc.gov.uk/pdfs/p50.pdf

poolprouk

Thanks for the help so far.

There is the possibility that the company will try and make me redundant on 29 Mar.

I would receive my severance & PILON and any outstanding pay into my bank account on 12 April as that is the next pay day.

What tax year would the tax liability on PILON fall? 12/13 or 13/14?

Thanks!