The Lemon Fool

I've decided to take voluntary redundancy at the end of march ( The redundancy payment will be paid end of April in the 2019/20 tax year)

Im trying to work out what the tax will be and if there's any NI due

The money is paid in 2 parts £40k for redundancy and an further payment of £10k for buying out some rights from when I was transferred under TUPE a few years ago ( shown on the agreement as enhanced redundancy pay)

know the first £30k of redundancy is tax free, so I have potentially £20k to pay tax on- as I will not receive any wages in that tax year ,should I only get taxed on £7.5k of the redundancy? this would use up my full tax allowance but as I'm living off cash in the bank this wont matter , or would my employer be expected to deal with the tax differently - if so do I have to claim it back from the tax man?

also Ive heard a few things about NI - I understand that I dont pay NI on any redundancy , but the company pays their NI - can someone confirm this is correct

steelman99 wrote: or would my employer be expected to deal with the tax differently - if so do I have to claim it back from the tax man?

It's likely to depend on what tax code they apply to the payment. The likelihood is that too much will be deducted and you will have to claim it back as part of your 2019-2020 tax return. It may be worth trying to get your employer and HMRC to apply tax as if it's your only earned income in that tax year.

Alaric wrote:

steelman99 wrote: or would my employer be expected to deal with the tax differently - if so do I have to claim it back from the tax man?

It's likely to depend on what tax code they apply to the payment. The likelihood is that too much will be deducted and you will have to claim it back as part of your 2019-2020 tax return. It may be worth trying to get your employer and HMRC to apply tax as if it's your only earned income in that tax year.

I don't think you'll get much mileage in trying to change your code, but if you not seeking re-employment, then you can use this -

https://www.gov.uk/government/publicati ... orking-p50

Otherwise, if you start a new job your new coding should trigger a repayment.