Self-assessment: redundancy pay showing up as employment?

Saria

I am fully self-employed and have been since mid-2021. 

I am looking at filling in my self-assessment, but am already struggling at the first part. I received a redundancy payment from my old job last year.
When I opened my self-assessment, it showed the following info:

I clicked the tick box and continued.
Now for some reason on the first page of the return, where it asks if you 'Were you an employee (or director or office holder) or agency worker in the year to 5 April 2023?' it has filled in the REDUNDANCY PAYMENT OFFICE as my employer. 



When I try to select 'No' for this question, I get a warning:

Tailor error

!Warning

You cannot remove a section from within '3. Tailor your return'.
Please use the 'Delete' link from within the section you wish to remove.

The 'Delete' link can be found in the bottom right hand corner of the page.

I am not sure what I am supposed to do here? This was a redundancy payment after an insolvency (which took a very long time to be paid out), so not employment, but it doesn't seem to let me progress. 


On a separate note, I looked for someone to help me with my SA in a local Facebook group and contacted someone a few people recommended (a fully qualified bookkeeper and part qualified accountant). But they are asking for my Government Gateway and password... is this normal practice? This is not something I just want to hand over to someone, but I also really need help with my SA... 

Dazed_and_C0nfused

If you don't think declaring that income on an employment page then where do you think it should be shown?

[Deleted User]

Saria said:

I am fully self-employed and have been since mid-2021. 

I am looking at filling in my self-assessment, but am already struggling at the first part. I received a redundancy payment from my old job last year.
When I opened my self-assessment, it showed the following info:

I clicked the tick box and continued.
Now for some reason on the first page of the return, where it asks if you 'Were you an employee (or director or office holder) or agency worker in the year to 5 April 2023?' it has filled in the REDUNDANCY PAYMENT OFFICE as my employer. 



When I try to select 'No' for this question, I get a warning:

Tailor error

!Warning

You cannot remove a section from within '3. Tailor your return'.
Please use the 'Delete' link from within the section you wish to remove.

The 'Delete' link can be found in the bottom right hand corner of the page.

I am not sure what I am supposed to do here? This was a redundancy payment after an insolvency (which took a very long time to be paid out), so not employment, but it doesn't seem to let me progress. 


On a separate note, I looked for someone to help me with my SA in a local Facebook group and contacted someone a few people recommended (a fully qualified bookkeeper and part qualified accountant). But they are asking for my Government Gateway and password... is this normal practice? This is not something I just want to hand over to someone, but I also really need help with my SA... 

on the final paragraph - it’s only normal if they don’t have their own agent government gateway and one must presume they don’t file any client returns. 

Basically they want access to your online tax account. Ultimately, if they file using your gateway account, it will be you who has made the submissions. Avoid!

Saria

Dazed_and_C0nfused said:

If you don't think declaring that income on an employment page then where do you think it should be shown?

I have no idea. I'm just confused by it being labelled as 'employment'. Will this be taxed (again)? I thought redundancy pay was tax-free?
It is basically my notice and redundancy pay for when the company I worked for became insolvent in August 2021.

anniecave

 Statutory redundancy pay itself is tax free, but amounts for notice would be taxable. Does that information already on the online account confirm that tax has already been paid on it? If so that's fine, as long as this same income and tax paid is also entered into the employment section then it will calculate correctly.  
https://www.gov.uk/termination-payments-and-tax-when-you-leave-a-job/what-you-pay-tax-and-national-insurance-on

uknick

It is correct to put it under the employment section. I haven't got access to my return, but it might be under "employment lump sums" and no, you won't, or shouldn't be be taxed twice.  You enter the payment in your return then enter how much tax you've already paid.

And, just to confirm, you get first £30k of a redundancy tax free, not just the statutory amount.  But, you don't get any  PILON, Payment In Lieu Of Notice, tax free.   

anniecave

I've gone back to this and looked and for me if I am doing a tax return, I would need to select in the first section under tailor your return - it's the question "Did you receive any other UK income, for example, employment lump sums, share schemes, life insurance gains?"  and I need to select "Yes" to this.  This will allow up a section for "Other UK income" different to the employment income section.  Based on the information on the help, it looks like the numbers entered under "Employment Lump Sums" is treated as a part of the numbers of the Employment Income. Which is logical as they are the same thing.  There are notes about how you need to enter tax paid on this. This is only allowing for taxable income though. 

If there are numbers that have been pre-filled in the Employment section (as the ex-employer or payer reported to HMRC) then I would take a good look at these. It should be straightforward to work out whether the amount listed here includes non-taxable redundancy pay, or it is only including the taxable amounts. Based on the information on the .gov.uk website, only taxable amounts should have been reported. So if that is the case it's all okay.  However If there are no other items on your tax return and simply the employment details for solely that payment from the ex-employer as entered are showing that there is additional tax due then I would look at this in more detail as there will be an issue here that needs to be resolved.