Redundancy in self assessment

btcp

I was made redundant this tax year, and I am wondering how to report it in the self assessment so the correct tax is charged.

 I have a mistake in my P45, and the employer suggested to use figures from the last payslip. I have a gross payment figure and a taxable one there. Taxable is 30k less then gross, which is correct. My question is do I just put a taxable figure in my self assessment? I looked at the last year form and don’t see where I would enter 30k non taxable amount, and I certainly don’t want to pay tax on that…
 
thanks! 

Johnjdc

I had a problem with this, and I think it's the reason I'm stuck on "Repayment Pending" over a month after submitting my return. So take what I say with caution but I'm pretty sure I'm right!

My employer did what it sounds like your employer did - pay the redundancy element over 30k as normal pay - but I think this generates too much tax, because while the redundancy amount above 30k is taxable, it is not liable to Employee's National Insurance.

First, you need to check that none of this excess amount is the result of PILON or PILOH etc.

Once you've done that, tailoring the return online (it's quite hard to find, it's a section about "other other income") will generate the ability to fill in what would be form SA101 in the paper version: https://www.gov.uk/government/publications/self-assessment-additional-information-sa101

Here, you can declare the sum which is both over £30k, and redundancy (and therefore deduct it from your other pay).

With regard to your core question about the £30k itself, the advice appears to be that you just pretend it doesn't exist, unless otherwise required to declare it, e.g. https://community.hmrc.gov.uk/customerforums/pt/1059f609-a8b3-ee11-a81c-000d3a86ec77

btcp

Johnjdc said:

First, you need to check that none of this excess amount is the result of PILON or PILOH etc.

thanks, and how do I do that? The amount that is higher that 30k is my settlement payment for all the years I worked there, i5 includes PILON but not only. I also worked there for 6 month so the salary is also included in the taxable pay. 

I am pretty sure they messed something up, as they didn’t pay me a corrected settlement amount, issued p45, and then paid me the missing amount later. I absolutely don’t trust their calculations, and was just hoping to sort it out via the self assessment. 

Johnjdc

btcp said:

Johnjdc said:

First, you need to check that none of this excess amount is the result of PILON or PILOH etc.

thanks, and how do I do that?

Good question! It was easier for me because the redundancy element was a contractual entitlement so I could work that out and proceed from there. An agreed severance which bundles up redundancy and the other elements feels like a trickier issue but you can't be alone. Maybe try the HMRC Community Forums?

btcp

Johnjdc said:

btcp said:

Johnjdc said:

First, you need to check that none of this excess amount is the result of PILON or PILOH etc.

thanks, and how do I do that?

Good question! It was easier for me because the redundancy element was a contractual entitlement so I could work that out and proceed from there. An agreed severance which bundles up redundancy and the other elements feels like a trickier issue but you can't be alone. Maybe try the HMRC Community Forums?

Thank you. I know exactly how much is my redundancy payment and how much is my PILON, it is stated in my settlement agreement. Are you saying I can work out tax for each of the elements? It would probably be too out of my reach  

Johnjdc

btcp said:

Johnjdc said:

btcp said:

Johnjdc said:

First, you need to check that none of this excess amount is the result of PILON or PILOH etc.

thanks, and how do I do that?

Good question! It was easier for me because the redundancy element was a contractual entitlement so I could work that out and proceed from there. An agreed severance which bundles up redundancy and the other elements feels like a trickier issue but you can't be alone. Maybe try the HMRC Community Forums?

Thank you. I know exactly how much is my redundancy payment and how much is my PILON, it is stated in my settlement agreement. Are you saying I can work out tax for each of the elements? It would probably be too out of my reach  

If you're doing self assessment you shouldn't need to work out tax, you just need to enter them in the right bit of the form and it will work out your tax. That said, if you can work out the tax, it can help reassure you that you, and they, have done it right!

btcp

Thanks, looking at the paper form, it can be a bit complicated. They want you to put tax paid on redundancy payment there. I have to read through the explanations and see if I can figure it out.. Ugh, why do they make it so hard! 

Johnjdc

btcp said:

Thanks, looking at the paper form, it can be a bit complicated. They want you to put tax paid on redundancy payment there. I have to read through the explanations and see if I can figure it out.. Ugh, why do they make it so hard! 

Yeah there was some weirdness on the online version relating to this but the notes cleared it up for me - but it's over a month ago so I forget exactly how, unlikely I'll ever have to do this again!