redundancy payments and tax

dubburke

I am going to be made redundant on the 31st August, and will be receiving £43k reundancy payment.
I know that the first £30k is tax free and the rest is taxed, but my question is, How does this figure show on my P45/P60? is this counted towards annual salary?.
The reason why i am asking is that both my wife and i work, at the moment i get £22000 a year and the wife £8,500, and so far i have only got a job paying minimum wage £12200 a year, and the wife still £8500.
With the amount of tax i have paid for the current tax year, will i be entitled to a tax rebate? and will i be entitled to any other benefits?
Thank you

monkeymax

dubburke wrote: »

I am going to be made redundant on the 31st August, and will be receiving £43k reundancy payment.
I know that the first £30k is tax free and the rest is taxed, but my question is, How does this figure show on my P45/P60? is this counted towards annual salary?.
The reason why i am asking is that both my wife and i work, at the moment i get £22000 a year and the wife £8,500, and so far i have only got a job paying minimum wage £12200 a year, and the wife still £8500.
With the amount of tax i have paid for the current tax year, will i be entitled to a tax rebate? and will i be entitled to any other benefits?
Thank you

The left over figure of 13k from your Redundancy will be added to your P45 as income this year and will effect the rest of the years tax. With income of 12000 you will pay tax, remember to hand your P45 from your last job straight into your new job so there will be minimal disruption. This way you probably won't get a repayment but you also won't be paying to much tax throughout the year. Your figures of income are too high for Working tax credits. Do you have children under 16? or under 19 in full time education? if you do you may be in line to get Child tax credits.

dubburke

monkeymax wrote: »

The left over figure of 13k from your Redundancy will be added to your P45 as income this year and will effect the rest of the years tax. With income of 12000 you will pay tax, remember to hand your P45 from your last job straight into your new job so there will be minimal disruption. This way you probably won't get a repayment but you also won't be paying to much tax throughout the year. Your figures of income are too high for Working tax credits. Do you have children under 16? or under 19 in full time education? if you do you may be in line to get Child tax credits.

Yes two kids aged 9 and 4

monkeymax

Then you will be entitled to Tax Credits and help towards anychildcare you may pay. Go online to HMRC.gov.uk and ask for an application form. They will backdate you 3 months.

dubburke

I would be entitled to £50 a week tax credits, but the Redundancy payment screws that up, so i will have to wait till the next tax year

profmo

My ex-girlfriend is thinking of dodging a bit of tax so she can pay me off a debt she owes me. She was made redundant two years ago and her redundancy package was split over two years to reduce tax. I think that is legal. The first part was a tax free payment of £25k. The second part of £12.5k was paid in the following year after she left as a cheque, not under PAYE. Her former employer will not have reported it to HMRC as wages as she was not by then an employee. What do you think? No accountants are involved. If I encourage her so I get the money she owes me and HMRC do find out could I get done as an accessory? Is there any way the HMRC might pick it up if she doesn't self declare? Thanks.

dubburke

I dont think that the Government would do that, as i am a civil servant!

theradfords

I have heard that if you pay the amount over the 30k redundancy payment ( 13K in your case) into AVCS, you may be able to avoid tax on it.

Not sure if this is correct though? any one know for sure?

missile

dubburke wrote: »

I dont think that the Government would do that, as i am a civil servant!

I guess this is a special voluntury redundancy deal?