Tax on refundancy payment

dollypeeps

Dh has just taken voluntary redundancy.

We have just received his wages and are surprised with amount of tax we have paid.

He get paid weekly and along with his weekly pay, there is the redundancy payment.

It's spilt into 2 elements

vol redund non tax £30000
Vol redund tax £35606
Tax paid is £11603

We are unable to work out how the tax is that amount.
It's more than 20%.
Wil he have been pushed into the higher tax bracket by this payment and have paid 40% on some of it.

Thank you in advance

Silvertabby

Yes - some at 20% and some at 40%.

Carl31

Monthly tax is based on the assumption a month is 1/12th of someones annual earnings, hence he will have been taxed as if that income occurs every month. Depending on the rest of his earnings this year, there will be an adjustment by HMRC. If he has paid too much, he will get a repayment, but unless he has only earned 9394 the rest of the year, it will be subject to higher rate tax

dollypeeps

How do we work this out?

Will the 40% be paying on the amount over £45001?

Are we able to claim any of this back?

Thank you

dollypeeps

Carl31 wrote: »

Monthly tax is based on the assumption a month is 1/12th of someones annual earnings, hence he will have been taxed as if that income occurs every month. Depending on the rest of his earnings this year, there will be an adjustment by HMRC. If he has paid too much, he will get a repayment, but unless he has only earned 9394 the rest of the year, it will be subject to higher rate tax

Thank you for your reply.
He gets paid weekly so I assume that 1/52 would apply here.
Am I correct in assuming that because he will not be earning for a short while HMRC should fund us 20% of the igher tax that they claimed?
Would we need to query this with them?

Thanks

badmemory

As there are only 5/6 weeks left of the tax year I would not expect the rebate to be large. Unless his employer has used a non-cumulative tax code. That would be one similar to 1150LX or 1150LM or 1150LW rather than just 1150L.

dollypeeps

badmemory wrote: »

As there are only 5/6 weeks left of the tax year I would not expect the rebate to be large. Unless his employer has used a non-cumulative tax code. That would be one similar to 1150LX or 1150LM or 1150LW rather than just 1150L.

Thank you for your reply.
We've been told that too.
It's just more complicated than we thought.
We knew we would be taxed on the amount over £30000 and as he's only a basic rate tax payer we assumed that we would be taxed at 20% on that amount but it appears we have been taxed at 40% on the amount which takes him over £45k.

Peelerfart

Pretty much agree with comments above. I was made redundant in June 17. Taxed to the hilt at the very time your income drops seemed so unfair but that's the way it works unfortunately.
You'll need to contact HMRC and explain stuff. Lots of people have been in your situation so it's a well trodden path.
Hey! Well done on the mortgage BTW, been there too! We now owe errrr.... Nothing :-)

getmore4less

HMRC have PAYE calculator on line.

http://payecalculator.hmrc.gov.uk/PAYE0.aspx


you can work out the refund due for the full year.

maninthestreet

Has your DH received his P45 yet?

dollypeeps

Peelerfart wrote: »

Pretty much agree with comments above. I was made redundant in June 17. Taxed to the hilt at the very time your income drops seemed so unfair but that's the way it works unfortunately.
You'll need to contact HMRC and explain stuff. Lots of people have been in your situation so it's a well trodden path.
Hey! Well done on the mortgage BTW, been there too! We now owe errrr.... Nothing :-)

Thanks and yes it does seem unfair.
I understand we must pay tax and because we've had 2 yrs wages upfront we pay tax on it but it was more than we expected.