Self Assessment HMRC - declare redundancy pay?

Augustus77

Hi there

I'm self-employed and filling in my HMRC tax return.

The redundancy package from my previous employment falls into the relevant tax year, and I'm not sure what components I need to declare.

I received:

- all salary up to the leaving date
- pay in lieu of notice (2090.00 GBP)
- compensation payment (3850.00 GBP)

My redundancy agreement states the following:

1) The Employee will declare and account to HMRC for any income tax due in respect of the Benefits.
2) The Compensation Payment (inclusive of SRP) will be provided to the Employee without any deduction in respect of tax or National Insurance contributions.
3) The Company makes no warranty as to the taxable status of the Compensation Payment and SRP and accordingly, the Employee hereby indemifies and agrees to keep the Company indemnified against any income tax and National Insurance contributions liability.

My P45 form states the 'total pay to date' and 'total tax up to date', but it doesn't look like it makes mention of the redundancy package.

The HMRC Self-Assessment form contains a question under 'any other income' asking whether I received any employment lump sums etc.

Which components of my redundancy package do I need to declare here?

Thanks!

Spidernick

Even though it's not taxable (so not part of the P45 amount), you still need to declare the tax-free amount in a separate box. You should be able to find this as you go through the on-line form.

The employer statement is just covering their backs should HMRC challenge the tax free status of part of the payment (which is unlikely).

Augustus77

So, I declare the 'compensation payment' under 'employment lump sums' and the 'pay in lieu of notice' in a seperate box that will show later?

Spidernick

Has the PILON been taxed? If so it's part of the P45, if not I think non-taxable total all goes in one box, but cannot remember exactly off the top of my head. Someone else may be able to advise on here.

dano17439

your redundancy payment will not be on your P45, and also not on your end of year P60 if you've received one

Augustus77

What I don't understand is whether any of this has already been taxed through the company before I received it.

[It was all paid onto my account in the same batch as my salary up to the leaving date, so it's too difficult for me to work out now how much of this sum consisted of the redundancy pay]

Point 2 says that "The Compensation Payment (inclusive of SRP) will be provided to the Employee without any deduction in respect of tax or National Insurance contributions."

Does this mean that the Compansation Payment was not taxed before I received it, but the Pay In Lieu of Notice component was?

moremore

Got option to delete assessment but would I be able to start again as it needs to be sent in...

agrinnall

moremore wrote: »

Got option to delete assessment but would I be able to start again as it needs to be sent in...

Start a new thread and explain a bit more what your issue is.

agrinnall

Augustus77 wrote: »

Does this mean that the Compansation Payment was not taxed before I received it, but the Pay In Lieu of Notice component was?

The Compensation Payment, if that's an interchangeble term for Redundancy Payment, should not have been taxed as it's below the threshold.

https://www.gov.uk/redundant-your-rights/redundancy-pay

You'd need to post figures to allow us to determine whether your PILON was taxed or not - perhaps your last two payslips and your P45.