60% deductions on one off payment

layla958

I've recently been received a one off payment of £35,000 however, according to the pay slip will only see 40% of this which is £14,000. 

By no means is this reflective of how much I earn and I will probably never see a payment like this again. 

My dedications are based on:  emergency tax (14.5k) NI (1k) Student Loan plan 2 (3k) and Post grad loan (2k) = 20k deductions!! 

This is obviously extremely frustrating, mainly from the standpoint that I already pay a lot towards student loan through my monthly income. Is there a cap on how much SLC can deduct- in similar way there is a threshold? 

Is there anything I can do to reduce the tax liability through self assessment? 

Dazed_and_C0nfused

Tax deducted during the tax year is just a provisional amount.

If there is a refund due or you owe more it will be resolved once the tax year ends.

Why was it taxed separately to your normal monthly income (wages?)?

How much do you think your total taxable income will be for the tax year?

Also, you will start of by owing money because the emergency tax code was used, you have had two lots of allowances and basic rate band as a result of that payment.  But that will likely be compensated for by the amount of higher rate and additional rate tax presumably deducted probably resulting in an overall overpayment.

layla958

Thanks for your feedback on that. 

It was taxed separately because it was paid from my previously employer as a result of the business being sold and all employees being beneficiaries. 

I think my total taxable income would be around 53k.  

Dazed_and_C0nfused

Then any refund will be part of your Self Assessment calculation.

If the whole £53k is employment income i.e. you will ultimately be paying higher rate tax on about £2.7k then you could save a little bit of tax by making a pension contribution which would increase your basic rate tax band.

All of the above assumes you are already required to complete a Self Assessment return.

pjread

I guess this was some kind of employee ownership trust scenario rather than e.g. you held some shares in the company directly?  Slightly surprised they'd payroll sales proceeds for a business (and get hit for income taxes and employer/employee NI etc) rather than try to arrange as a capital gain, but conscious I don't know the details and I'm sure there's a reason.