Not sure if I've overpaid tax - opinions requested!

caravan_girl

Hello!

I took voluntary redundancy from my previous job last year.  Everyone in my company was told to apply for voluntary redundancy, as this came with an additional payment, there was no guarantee anyone would secure another role so if they didn't apply they would only have got the standard redundancy payment.

I wasn't taxed on the redundancy payment, which I know was what should have happened, but I was wondering if I should have paid tax on the additional payment I received?  As an example, my last normal wage was:

30 June 2020 Taxable Income:

£1,743.35

Income Tax Paid: £138.26

National Insurance Paid: £114.16

when my redundancy came through it was as follows:

31 July 2020

Taxable Income:  £4,728.86

Income Tax Paid:  £752.71

National Insurance Paid:  £416.24

It took me until 29 March 2021 to find another job so I was unemployed but not collecting benefits as I went to College and receive a student loan which covered costs from September 2020 up to June this year.

Is there any chance I might be due a rebate on the amount of tax I paid on the additional payment I received as part of my redundancy package, now that the new tax year has started?  Or is it simply a case of I was paid a large amount, so therefore the large amount of tax and NI was to be paid on it?

Any advice much appreciated.  I've just been online to claim the WFM tax allowance so thought I'd ask out of interest.

Dazed_and_C0nfused

You need to look at the tax year as a whole so what was the total taxable income from your employment and the taxable redundancy?

Didi you claim Jobseeker's Allowance and if so how much taxable Jobseeker's Allowance did you receive during 2002:21?

Were you paid by your new employer before 6 April 2021?

Did you have any other taxable income in 2020:21?

NB.  I'm assuming you aren't questioning if the correct tax was deducted at the time, just if you are due a refund for 2020:21 based on what happened in that tax year.

caravan_girl

Dazed_and_C0nfused said:

You need to look at the tax year as a whole so what was the total taxable income from your employment and the taxable redundancy?

Didi you claim Jobseeker's Allowance and if so how much taxable Jobseeker's Allowance did you receive during 2002:21?

Were you paid by your new employer before 6 April 2021?

Did you have any other taxable income in 2020:21?

NB.  I'm assuming you aren't questioning if the correct tax was deducted at the time, just if you are due a refund for 2020:21 based on what happened in that tax year.

Thank you for your reply!  

The total taxable income from my employment was:  £10,094.07 for that tax year

I was paid for three days of work by my new employer on 31st March.

I didn't claim JSA in that tax year as I was able to live on my redundancy money and my student loan

I didn't have any other taxable income in that tax year either.

You're correct, I'm not questioning what was taken, just if I'm due a refund based on what happened in that tax year.

GrumpyDil

For the 2020/2021 tax year you would have had a personal allowance of 12500. As your taxable income appears to have been below that amount you should be due a repayment of the tax you paid (not the NI though).

I'm not sure how that gets handled as I've never been in that position but suggest you ring HMRC to check. 

caravan_girl

GrumpyDil said:

For the 2020/2021 tax year you would have had a personal allowance of 12500. As your taxable income appears to have been below that amount you should be due a repayment of the tax you paid (not the NI though).

I'm not sure how that gets handled as I've never been in that position but suggest you ring HMRC to check. 

Thanks for your reply!  You've confirmed what I thought might be the case, but not having dealt with this before, I wasn't sure.  Thought I'd get a second opinion before I tackle the HMRC phone line

Dazed_and_C0nfused

You don't need to do anything, HMRC will review the tax year that has just ended and send you details of any tax overpaid sometime over the course of the next few months.

https://www.gov.uk/tax-overpayments-and-underpayments

caravan_girl

Dazed_and_C0nfused said:

You don't need to do anything, HMRC will review the tax year that has just ended and send you details of any tax overpaid sometime over the course of the next few months.

Thanks for letting me know.  At least that'll save me a call to HMRC!

molerat

If you handed your P45 to your new employer and they paid you in the last tax year why didn't they refund any overpaid tax ?

caravan_girl

molerat said:

If you handed your P45 to your new employer and they paid you in the last tax year why didn't they refund any overpaid tax ?

I hadn't yet submitted my P45 to my new employer at that point, as I wasn't expecting to get paid three days after starting my job, so when I got my first wage slip for those three days I then sent HR my P45.  Pay day is 22nd of each month, the first pay was sent to us on 31st March meaning it was an ad-hoc payment.  I've joined the company remotely so it wasn't a case of me going into an office and taking any relevant documents with me, like I'd have done in the past.

theoretica

As above, you should get this sorted automatically through your tax code.  I believe this will have the effect of spreading the refund out over the entire year, so don't get a shock when your tax rises next April.  Keep an eye on your tax code on your next pay slip to check it has changed.

Dazed_and_C0nfused

You cannot get a tax refund for one tax year paid via wages payments in the next tax year.

HMRC will refund the tax overpaid in 2020:21.