Tax with settlement payment

Gobigorgohome

Earnings since April 25 to July were £30k
i was just dismissed and offered £125k settlement. Does that mean I’ll lose tax free and childcare hours?

DullGreyGuy

Is it being badged as a redundancy payment?

Gobigorgohome

They’ve not confirmed that it is redundancy but I assume that’s what they’d use as a reason overall but now just says settlement

sheramber

If you are not working , unless you are claiming certain benefits, you will no longer be eligible   For tax free childcare. 

Free hours depends on what hours it is.


https://www.gov.uk/free-childcare-if-working/check-youre-eligible

If you are not eligible for free childcare for working parents

You may be able to get other help towards childcare costs.

If your child is between 3 and 4 years old and you live in England, you can get 15 hours of free childcare a week for 38 weeks of the year.

If you claim certain benefits, you may be eligible for free education and childcare for 2-year-olds under a separate scheme.

HampshireH

Gobigorgohome said:

Earnings since April 25 to July were £30k
i was just dismissed and offered £125k settlement. Does that mean I’ll lose tax free and childcare hours?

It's still income. Redundancy income isn't one of the 4 things they list as not considered 

It's counted per financial year.

For tax free childcare 

Certain types of income will not count towards the minimum amount you must earn to be eligible.

These include:

dividends

interest

income from investing in property

pension payments

If you or your partner have an expected ‘adjusted net income’ over £100,000 in the current tax year, you will not be eligible.

However unless you get another job quickly you also won't be meeting the monthly income to receive this.

For childcare hours the adjusted net income also applies.

Don't forget what you will have been paid up to your redundancy date will also be counted as your total income for the financial years as will any bonuses if applicable 

Others will probably advise better but I thought in redundancy the first was £30k tax free. I may be wrong. But you definitely want to know 

Gobigorgohome

Will I have to repay back for the tax free and hours we’ve used so far too?

HampshireH

Gobigorgohome said:

Will I have to repay back for the tax free and hours we’ve used so far too?

Probably a question for them directly  or maybe Google. Other forums would suggest not but please don't quote me.

However as soon as you know your getting it you'll need to declare it

sheramber

If you are no longer employed then you are not eligible for the free hours for working parents. 

You will still be eligible for  15 hours a week for 38weeks a year if your child is 3 or 4.

Chikd Care helpline. 

Phone

Call HMRC if you need help:

• applying for Tax-Free Childcare
• applying for free childcare if you’re working
• using your childcare account

Before you call

This helpline may ask you some security questions. Make sure your personal details and address are up to date in your personal tax account or you could fail telephone security. If you do not have a personal tax account, you can create one before you check your details.

Telephone: 0300 123 4097

Textphone: 0300 123 9232

Opening times: Monday to Friday, 8am to 6pm. Closed bank holidays.

Find out about call charges

Related content