How do I declare Tax-free Settlement in Self Assessment Tax return?

BywatersB

Hello,
I'm hoping that I can benefit from the advice of a helpful person that knows a lot more than I do! I'm currently completing my tax return for 2014/15.... I know, why do I always leave it until that last minute??!
During the tax year I took redundancy from a company for who I had worked for 12 years. As a result the redundancy pay off was quite generous - in excess of £30,000. I was told that this would only be taxable, above £30,000 - as was written in the "Voluntary Paid Leavers' FAQs' that were published by my employer: "You will pay tax on any Leaver payment taken as a cash payment in excess of £30,000 at your marginal rate". The settlement that came through to me was true to this. I was given £30,000 tax free and then the amount above that was taxed. My questions is, how do I declare this on my self assessment? As the £30,000 was exempt from tax, do I leave it out of my self assessment earnings?, and if I do declare it, where and how do I do this to ensure they don't tax it in error? Any advice would be gratefully appreciated, as I'm worried about being stung for tax on this - which would be a hefty bill!
Thanks very much in advance!

Snakey

Hello B.

It goes in boxes 5, 6 and 9 on page 2 of the Additional Information pages (Share Schemes and Employment Lump Sums) - although I note there's a box to tick if you've included the taxable bit in your Employment Income pages, so I don't know whether that means you have a choice about where to put that part or what. The notes pages that go with the AI section might help you there.

BywatersB

Thanks Snakey. So if I put it in there, do you think it is safe from the taxman?

Snakey

Well, it's either taxable or it isn't, and that is decided by applying the law to the facts. They can't tax something that isn't taxable just because you put it in the wrong box (although if you did do that they could hardly be blamed if they took it at face value and sent you a tax bill, and it would then take some time and trouble to sort out - so read the notes, read the bumf you were given when you left, and work it out carefully).

BywatersB

Thanks for the help!
For anyone else reading this, I've just followed Snakey's advice and it seems pretty clear that the £30,000 is exempt from Tax, so don't worry like I did!