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Tax Year for Redundancy Payment
wmjpower
Posts: 17
Forumite
I am about to sign a settlement agreement with my employers for a redundancy. The amount will be over £30k and I am already paying tax at the higher rate.
I understand that the first £30k of redundancy will be tax-free but all amounts in excess of this will be taxed. The query I have is that the settlement agreement date is 31 March 2018, but the payment will not be made until 14 days after the date of the agreement (i.e. 14 April 2018). Will the tax point for the redundancy payment be 31 March 2018 (i.e. 2017/18 tax year) or will it be when it is physically paid on the 14 April 2018 (i.e. 2018/19)?
It may be some time until I am able to secure my next position and from a tax perspective it would be better if the tax point was 2018/19, but is there anyone who can advise?
I understand that the first £30k of redundancy will be tax-free but all amounts in excess of this will be taxed. The query I have is that the settlement agreement date is 31 March 2018, but the payment will not be made until 14 days after the date of the agreement (i.e. 14 April 2018). Will the tax point for the redundancy payment be 31 March 2018 (i.e. 2017/18 tax year) or will it be when it is physically paid on the 14 April 2018 (i.e. 2018/19)?
It may be some time until I am able to secure my next position and from a tax perspective it would be better if the tax point was 2018/19, but is there anyone who can advise?
0
Comments
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I'm almost 100% sure it will fall in 18/19 but someone else might be able to absolutely confirm.“I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse0
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