Redundancy Overpayment

Clive1982

Hi


I entered in consultancy for redundancy with my then employer in January, during the consultancy I was offered a settlement agreement with an enhanced redundancy to leave the company after serving notice, so I left the company in April, I was paid over £30,000 redundancy so the company agreed to pay the excess amount (above £30,000 Taxable - including that months pay into my pension), which I received in the normal payroll run on 25th April.


While serving my redundancy notice more employers were also made redundant, so they were given dates leaving after myself.


I was surprised this month to receive a further redundancy payment (on 25th August), this was for my full redundancy amount again, but this time I received the full amount with the amount over £30,000 that had been heavily taxed (not sent to my pension). I only noticed this payment over the weekend, so I intend to contact my former employer this week regarding this further payment.


Since leaving my former employer I now have a new Job I started last month, I am concerned that this will cause problems for me with the HMRC Tax as I perform self assessment as I earn over £50,000 and payback the child benefit, so this year I will have income from my previous company + my new employer (over £50,000) and 2 redundancy payments, 1 of which I have paid tax on heavily above the £30,000.


Can you please advise how I am best breaching this with my former employer (who were quite hostile in the settlement agreement) and HMRC Tax?


Thanks for any advice.

TBagpuss

You will need to arrange with your former employer to repay the second payment.
In terms of the tax, I think that if your ex-employer paid the tax diectly then they will need to notify HMRC but in your position i would be doing the same - once now (in writing, keping a copy) and again when you submit your return.

As the second payment was made in error and you will be returning it in full then you should not end up paying any tax on it.

If your relationship with your ex employer is not good then make sure you put eveything in writing and kep copies so that you have a record of what you have said.

In the firs instance write to them, state that you have just noticed that the sum of [£xx] was paid to you on [date] amnd tat this was an error as you have previously recieved your full redundancy on [date].

Ask them how they would like it repaid and ask them to confirm that they will also notify HMRC. I suspect that you will find them easier to deal with when you are trying to return £30K + than when you were negotiating for them to pay it, but I may be wrong.

Clive1982

Thanks for the reply TBagpuss.


I intend to phone my former employer tomorrow to get the contact details for who should be dealing with this (the office I worked at has now been closed, so I will have to contact their head office). My new job entails me working away from home 4 days a week, so my opportunity to contact them are limited.

loskie

just put the overpayment into premium bonds and pay it back when they come asking for it.
Let them do the chasing.
You will eventually get a tx rebate for any overpayment of income tax once the overpayment is eventually paid back.

You are not being dishonest just letting your old company do their job not you doing it for them.

Clive1982

I might just do that Loskie.


I contacted my ex-employer Payroll department and they gave me a contact in the HR department as they could not deal with it, who have not contacted me back since I emailed them (they would not give me a contact phone number as it is not company policy).


So as far as I am concerned I have done all I can and have notified them. I have had to take a new role since being made redundant which means I am away from home 4 days a week, so I do not intend using the time I am at home chasing their incompetence. I will keep the money to one side and wait for them to contact me about it, income bonds is a good idea as I can get hold of the money immediately to return it when my former employer makes arrangements, and I might win in the mean time !!!