Self assessment - where do you enter Redundancy payments?
Discussion
Looking into it I think I need to select "did you receive any other UK incomes for example, employment lump sums, share schemes, life insurance gains"
However as P45 it makes it an utter mess so in the employment section ill be entering the P60 value less the redundancy payment.
Turns out my new employer simply took the P45 value and have taxed me including redundancy (I didn't notice as the first 5 months the pay was all wrong month by month). So back of fag packet means I'm due a tax rebate of £10k +
.
However as P45 it makes it an utter mess so in the employment section ill be entering the P60 value less the redundancy payment.
Turns out my new employer simply took the P45 value and have taxed me including redundancy (I didn't notice as the first 5 months the pay was all wrong month by month). So back of fag packet means I'm due a tax rebate of £10k +
. Why?
If you left your employment ended during tax year 2012/13, then the salary details you enter on your return should be exactly as stated on the P45.
If you started a new employment before 5 April 2013, then the income and tax deducted from THAT employment will be based on the P60.
If you had two employments during the tax year, then you have to complete two sets of employment pages.
Did the employer you left include the extra redundancy payment they gave you as part of the P45?
Did they account for the tax correctly on the redundnacy payment?
How much of the redundancy payment was Statutory Redundancy?
How much was an ex-gratia payment (NOT redundancy)?
If an ex-gratia payment was paid to you, was it under £30,000?
If you left your employment ended during tax year 2012/13, then the salary details you enter on your return should be exactly as stated on the P45.
If you started a new employment before 5 April 2013, then the income and tax deducted from THAT employment will be based on the P60.
If you had two employments during the tax year, then you have to complete two sets of employment pages.
Did the employer you left include the extra redundancy payment they gave you as part of the P45?
Did they account for the tax correctly on the redundnacy payment?
How much of the redundancy payment was Statutory Redundancy?
How much was an ex-gratia payment (NOT redundancy)?
If an ex-gratia payment was paid to you, was it under £30,000?
Hi Eric.
The previous employer has accounted for the redundancy incorrectly while the second employer has simply taken the P45 values.
As such (I have all the formal redundancy letters confirming it is not pay in lieu of notice but instead a redundancy payment) I will lower the "income" elect by the redundancy payment noting this in the other income which is tax free and show the physical tax paid by the P60.
Ill also call IR tomorrow to double check - my view is if I do it this way IR give the correct tax rebate.
How long do tax rebates take from an online self assessment submission at this time of year - with electronic payment requested?
The previous employer has accounted for the redundancy incorrectly while the second employer has simply taken the P45 values.
As such (I have all the formal redundancy letters confirming it is not pay in lieu of notice but instead a redundancy payment) I will lower the "income" elect by the redundancy payment noting this in the other income which is tax free and show the physical tax paid by the P60.
Ill also call IR tomorrow to double check - my view is if I do it this way IR give the correct tax rebate.
How long do tax rebates take from an online self assessment submission at this time of year - with electronic payment requested?
Welshbeef said:
Filling out my annual form and I've a redundancy payment which is under £30k how do I enter this as clearly no tax is due on it.
Thanks chaps.
I'd be a cautious about this in general terms, it is my experience that the 30K figure for redundancy payments not been taxable was bandied about so much that at some point people took it as fact.Thanks chaps.
It is far from fact,in my limited knowledge, it is the "Damages" element of the payment which is not taxable.
To give you an example, if down the local supermarket, a punter gets a keg of beer dropped on their foot and gets £10k damages, would you report that on your tax return, so why report your tax free damages from breach of contract on your tax return.
THIS IS NOT Advice but review your facts, HMRC love to question these arrangements and often ask to see all supporting evidence.
There is NO automatic exemption from tax of redundancy payments. The £30,000 amount that is generally referred to as tax exempt is nothing to do with redundancy. It relates to an "ex gratia" payment to an employee.
Any payments made that wish to be treated as tax free must fall within the definition of "ex gratia" payment so any wording associated with the payment - such as a letter - must NOT refer to redundancy, reward, pay in lieu of notice or ANYTHING that hints that the payment might have a contractual relationship with the terms of employment.
You need to be very careful how you refer to this payment in the tax return.
Any payments made that wish to be treated as tax free must fall within the definition of "ex gratia" payment so any wording associated with the payment - such as a letter - must NOT refer to redundancy, reward, pay in lieu of notice or ANYTHING that hints that the payment might have a contractual relationship with the terms of employment.
You need to be very careful how you refer to this payment in the tax return.
Hyper10 said:
I'd be a cautious about this in general terms, it is my experience that the 30K figure for redundancy payments not been taxable was bandied about so much that at some point people took it as fact.
It is far from fact,in my limited knowledge, it is the "Damages" element of the payment which is not taxable.
To give you an example, if down the local supermarket, a punter gets a keg of beer dropped on their foot and gets £10k damages, would you report that on your tax return, so why report your tax free damages from breach of contract on your tax return.
THIS IS NOT Advice but review your facts, HMRC love to question these arrangements and often ask to see all supporting evidence.
Oh fully agreed I have all the documentation including my lawyer who went through it with me painfully page by page. There is no question it is redundancy. It is far from fact,in my limited knowledge, it is the "Damages" element of the payment which is not taxable.
To give you an example, if down the local supermarket, a punter gets a keg of beer dropped on their foot and gets £10k damages, would you report that on your tax return, so why report your tax free damages from breach of contract on your tax return.
THIS IS NOT Advice but review your facts, HMRC love to question these arrangements and often ask to see all supporting evidence.
Called the IR today and they seemed fine with what I was suggesting - they did say all documentation to hand as if there are any investigations that will be required
In my experience, any amendment of a P60 or P45 figure on a tax return will automatically lead to an Aspect enquiry re the Employment supplementary page.
Whilst I wholly understand why you are doing it, the above is standard practice in my experience.
I would say adding a full explanation in the space for Additional information should avoid this (as you were told), but it has been established that HMRC rarely read or take notice of entries there when the returns are received!!
Normally refunds are app 5 working days post online submission - you may be lucky if the system issues the refund before any enquiry, otherwise it will be held back pending resolution.
Please update with what transpires.
David
Whilst I wholly understand why you are doing it, the above is standard practice in my experience.
I would say adding a full explanation in the space for Additional information should avoid this (as you were told), but it has been established that HMRC rarely read or take notice of entries there when the returns are received!!
Normally refunds are app 5 working days post online submission - you may be lucky if the system issues the refund before any enquiry, otherwise it will be held back pending resolution.
Please update with what transpires.
David
Pretty much repeating what people have already said but I had a redundancy payment in the last tax year, ex-employer paid for expensive lawyers to look over the 'Compromise Agreement' and then it went through tax-free on the payslip and appeared on the P45.
Hence no need to mention it on the Self Assessment form and the tax refund that I was due came through within about five working days.
Hence no need to mention it on the Self Assessment form and the tax refund that I was due came through within about five working days.
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