Redundancy & Tax
in Redundancy & redundancy planning
2 replies 141 views
Hi everyone - I'm wondering if anyone has gone through the same experience as I am about to ? I will be being made redundant in June and will be receiving a payment of around £51,000. I am aware that the first 30k is tax and NI free and I won't pay NI on the remaining 21k but is there a chance that I will get over taxed on that 21k? I'm currently in the 20% tax bracket and I'm not sure if the time of year you are paid the redundancy has any bearing on the tax that is paid?
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1, if you will not be working again, nor claiming a taxable benefit, i.e. Jobseekers, in the tax year you can claim back any overpaid tax immediately as blue.peter has said.
2, if you will be working again or will be claiming jobseekers allowance, then there are 2 options.
a) if you work again then any overpaid tax will be repaid as the year goes on with your new salary by adjusting your weekly/monthly tax deduction when you are paid. This will happen automatically when you hand in your P45 assuming that the taxable redundancy pay is included on the P45.
b) if you claim JSA then as long as you hand in the P45 on the day you make your claim/have your first interview at the jobcentre then you will get the overpaid tax due back when you sign off/at the end of the tax year, whichever comes first, paid by the jobcentre.
c) if you expect to go back to work at some point before the end of the tax year, and dont claim JSA, then you can claim an unemployment repayment every 4 weeks, with the first claim being 4 weeks after your final pay from your employer. Again this would require the P45 your employer issues to include the pay/tax including the taxable redundancy pay.