Redundancy Pay Taxed Incorrectly - Where to Escalate?

catsatonthemat

I was recently furloughed and offered voluntary redundancy which I took. Part of my final salary was my notice period, the company also included an additional sum tax free / ex gratia, this was the larger amount. I've received my final pay slip and they've taxed the amounts the wrong way round.  I pointed it out and they've now gone quiet. Does anyone know where I can go to resolve this? I don't imagine it's an HMRC tax rebate due to the specific circumstance. 

Thrugelmir

Gone quiet as in not taking your phone calls? 

Jeremy535897

catsatonthemat said:

I was recently furloughed and offered voluntary redundancy which I took. Part of my final salary was my notice period, the company also included an additional sum tax free / ex gratia, this was the larger amount. I've received my final pay slip and they've taxed the amounts the wrong way round.  I pointed it out and they've now gone quiet. Does anyone know where I can go to resolve this? I don't imagine it's an HMRC tax rebate due to the specific circumstance. 

If they have taxed the larger amount and not the smaller amount, why do you talk about a rebate?

daveyjp

Did you get a formal redundancy agreement setting out the terms and conditions of the settlement?

calcotti

Jeremy535897 said:

catsatonthemat said:

I was recently furloughed and offered voluntary redundancy which I took. Part of my final salary was my notice period, the company also included an additional sum tax free / ex gratia, this was the larger amount. I've received my final pay slip and they've taxed the amounts the wrong way round.  I pointed it out and they've now gone quiet. Does anyone know where I can go to resolve this? I don't imagine it's an HMRC tax rebate due to the specific circumstance. 

If they have taxed the larger amount and not the smaller amount, why do you talk about a rebate?

I infer that they have taxed the larger amount (the ex gratia payment) but not the final salary payment. The ex gratia payment should be tax free. Therefore OP has had more tax deducted than is actually due.
OP, I think that despite the circumstances this is probably still something to take up with HMRC. 

catsatonthemat

Yes it was a formal agreement, and as described, the tax free amount was larger and I have been charged tax on it. I can only imagine what a pain it's going to be to get it back from HMRC given the amounts were specified in my settlement agreement rather than the tax being calculated in the usual way.

Jeremy535897

That was my assumption too, but the language wasn't clear to me. I think the issue is going to be the fact that the employer's records will have the incorrect figures for each category. One option is to complete a self assessment tax return with the correct figures, which will generate a tax calculation showing a repayment. Unfortunately that cannot be filed until 6 April 2021.
The circumstances can be explained in the notes. The problem is that HMRC will no doubt check the figures to the employer's records, which are wrong. I agree that the starting point is HMRC, if the employer is not communicating. This guidance sets out what HMRC suggest is done:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/366615/employer-errors-deduction-paye.pdf

catsatonthemat

@Jeremy Apologies for not being clear, I thought I had been. Thank you for the link, that's really helpful. What a pain to get it back, especially at this time, and with such a long wait. 

@Thrugelmir The office is closed because of the pandemic, so there are no phones, just email. 

Jeremy535897

catsatonthemat said:

@Jeremy Apologies for not being clear, I thought I had been. Thank you for the link, that's really helpful. What a pain to get it back, especially at this time, and with such a long wait. 

@Thrugelmir The office is closed because of the pandemic, so there are no phones, just email. 

No problem. The link is a bit of a last resort, as it really addresses under deductions of tax, rather than your situation, and obviously there is no "bad faith" from HMRC's point of view. So I'd start by telephoning HMRC.

Grumpy_chap

If you have a settlement agreement, which should have been run past a solicitor, the last resort would be to get the solicitor to write to the company to resolve.  Though, as @Jeremy535897 said, it can be resolved through tax return (with the settlement agreement as you evidence of what should / should not have been taxed).  It does seem, though, that a genuine mistake was made and, hopefully, the company will just resolve it once the office reopens.

stratty

Without more detail it's difficult to draw a conclusion but note that in some cases your ex Gratia is contractual it can be taxable.