Tax refund ?? following leaving work aged 64 with a Settlement Agreement

NeverOutOfWork

Will there be any tax refund ??

I will have worked 6 months of this tax year when I finish work with a Settlement Agreement in September, I am 64 and wont be returning to work as I have some savings.  I'll wait until claiming my company pension to age 65 as originally planned and am obviously aware that I'll have to wait a further 12 months for my state pension.

Somebody told me I'd be in line for a tax refund but I've never been in this position and as I'll be living off my settlement I was surprised and very very interested.

Thank you for any help, Rob.

Brie

Is the settlement payment taxable?  If it was in fact a redundancy payment then it may not be taxable and then you might figure out the potential tax rebate by taking the 6 months pay, reduce by the personal allowance and see how much tax is payable on that.  If by Sept you have paid more in tax than that amount you should get a refund.  But not until this time next year as they'll wait until the end of the tax year to do any calculations.   

NeverOutOfWork

Hi Brie, it is taxable but I am taking the tax free bit and having the balance paid into my company pension fund.

chrisbur

Have a look here
https://www.gov.uk/guidance/claim-back-income-tax-when-youve-stopped-working

NeverOutOfWork

Thanks Chris, I shall read

Undervalued

Brie said:

Is the settlement payment taxable?  If it was in fact a redundancy payment then it may not be taxable and then you might figure out the potential tax rebate by taking the 6 months pay, reduce by the personal allowance and see how much tax is payable on that.  If by Sept you have paid more in tax than that amount you should get a refund.  But not until this time next year as they'll wait until the end of the tax year to do any calculations.   

Normally the first £30K of a settlement agreement is tax free, providing it is compensation for the loss of the job (even without any admission of liability) but not in any way a contractual entitlement.

Payment in lieu of notice (PILON) is taxable just as if the notice had been worked, as is payment for any untaken holiday and anything else that would have been paid if the employee left in the normal way.