Reclaiming overpaid tax on lump sum

HarpoonJoe

Hi

I was made redundant at the end of May and received my last payment while still in employment (25th May). My tax was calculated as if my final payment was a regular payment so I ended up paying way too much tax (about 10k too much).

I'm not working at the moment and I'm intending to take the summer off at least.

Anyway, wanting to claim back my overpaid tax I followed the advice on the .gov website and phoned the HMRC. All I got was an automated message saying that anyone who thinks they have overpaid that tax will be automatically recalculated by the end of July.

I was wondering if anyone has any experience of this and how it might pan out. How long does the refund take and do I get a cheque in the post or is it a bank transfer? Will they send me a p800 through the post?

I know I could just sit and wait it out but it's a lot of money and I really need to know when and how to expect it.

Is there anything I could/should do at this end in the meanwhile?

Thanks

chrisbur

This sounds like advice to anyone expecting a refund for last tax year.
You can request a refund every four weeks providing you are not working or signing on, your tax due would be recalculated and any refund due as at that time paid and a new P45 issued. Form to do this is a P50.

https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/PersonalTax_iForms/1.0/P50&template=P50.xdp

Volv

I am in a very similar situation and expecting my PILON (12 weeks) on the 9th of July. Similarly I expect to pay 'too much ' tax on the payment. Nowhere near as much though and might just let it ride unless things get really tight.

My question though is what happened with your National Insurance payment on the PILON?

Did you pay 12 weeks worth of Normal NI or an inflated amount similar to the tax situation?

Does anyone know if this counts as 12 weeks of NI for NI credit purposes or if it counts as 1 pay period meaning to keep up NI records it is necessary to apply for JSA or pay contributions straight away?

Am I covered until my pay date or until the end of the 12 weeks?

Any insight is appreciated

Update - for anyone interested

Finally found some half decent info about most of this.

gov.uk/government/uploads/system/uploads/attachment_data/file/426508/CWG2__2015_.pdf

Page 76. Item 1 and Page 77. Under Table

For NICs purposes
If you make payment:
• when the employee leaves, work out NICs based on the regular earnings period for the employment

So should be equivalent to 12 weeks normal NI. With only the tax bill being higher.

Only question now is about when the NIC take me up to. How long before I need to act to stop a gap developing.

chrisbur

This means that your full payment will be treated as one week's wages for NI if you are normally paid weekly. Most people save money as a result of this as the earnings go over the upper earnings limit and NI reduces.

Volv

Hadn't considered that. I am paid 4 weekly which should mean my NI figure will be around 41% of what I expected which is nice (and mostly offsets the higher tax)

Also seems to imply that NIC contributions would be required straight away to avoid a gap.

I have been trying to work out if worrying about the potential gap is worth it though because as it stands I should easily hit the new 35 year requirement for state pension. On course for 48 currently

chrisbur

If you are paid four weekly then your last payment will be treated as a four week payment.