Tesco team leader options (redundancy or step down with payout )

Batho1985

Hi I was looking for some advice on an ongoing issue within Tesco. I am currently a team leader however due to a recent re-structure they no longer need team leaders. We have 2 options:

1. Take redundancy with a payout non taxable
Or
2. Step down as team leader and take a payout which is taxable and keep a full time job.

I have choose option 2 as I still need a full time job, the reason I am on here is because I was curious to know if my wage and the payout will be added together and then taxed as a whole or will it be seperate as the tax on the whole will be greater than the 2 seperate taxes and will lose out on more money due to tax?

Also will I be put into a higher tax bracket due to the amount of money I will earn in that month of the payment?

Will I have to claim the tax back in next years rebate?

Can anyone give me any advise

antrobus

Batho1985 wrote: »

.
I have choose option 2 as I still need a full time job, the reason I am on here is because I was curious to know if my wage and the payout will be added together and then taxed as a whole or will it be seperate as the tax on the whole will be greater than the 2 seperate taxes and will lose out on more money due to tax?....

Your wage and the payout will be added together and will be taxed as a whole.

Batho1985 wrote: »

....Also will I be put into a higher tax bracket due to the amount of money I will earn in that month of the payment?....

Depends on how much you're talking about.

Batho1985 wrote: »

....Will I have to claim the tax back in next years rebate? ..

PAYE is calculated on a cumulative basis, so if you are hit for higher tax in the month that you receive the payout if, by the end of the tax year you are not liable for higher rate tax, then it will be automatically refunded through PAYE.

YorkshireBoy

antrobus wrote: »

Depends on how much...

It's 2 years make up pay, so just over £6K.

lazyred

Your tax is recalculated each month on the total you have earned so far less the the tax paid so far.
So the month you get the extra 6K you will be taxed too much. For each month after that you will get a refund. I think you can also apply for an immediate refund.

getmore4less

The tax is the same two payments or one.

the NI will be lower if paid in one lump so overall better off.

When will it be paid?
if this tax year it will be the last month so be correct.

If next tax year it will be more initially and then the following months it will correct itself(quickly)

Tax bracket will depend on your totals for the year, and if you are around £10k or £42k

getmore4less

One issue with a lump sum is any future redundancy will be on the lower wage, if it was pay protection that would protect the redundancy pay for the protection period.

Batho1985

Thanks guys
I won't be taking the redundancy as I won't have a job after it and I have bills to pay n family to provide for.
Will be stepping down and taking the money

Should I inform the hmrc about this up coming lump sum?

The money is likely to be paid in May rather than April.
What will happen to my tax code in the following months after this lump sum if I don't inform the hmrc?

Any advise will be much appreciated

Thanks

getmore4less

If paid through PAYE(which would be the sensible thing for Tesco to do) you don't have to do anything.

no1catman

You haven't said how long you have been working in Tesco and therefore how big the redundancy could be?
Could it be big enough plus the PILON - to enable you to get another job? Or even if you did are you thinking that a replacement job wouldn't be as good as your t/leader position?


AS others have said any sudden jump in Tax would equalise over the year.
One option you've got there is to use some of it to top up the Tesco Pension i.e. AVC - especially with the recent restructuring!