I have been made redundant and am able to negotiate my leaving date to be either side of the tax year. I am in this tax year a 50% tax payer.My assumption is that it is more beneficail to be made redundant in the 2012/13 tax year from a tax perspective - particualrly if I am either out of work for some months or do not get as well paid new job?
Province/Country relating to question: UK
Hi.How much redundancy pay will you receive?TonyTax40980.4793395023
£94,941 plus an extra months salary to leave on 9th April - approx £6k net.
Or £108551 to leave 09/03/12
Thanks.If you are already paying 50% tax then all of the redundancy payment save for the first £30,000 which is tax free will be taxable at 50% so having your leaving date in the 2012/13 tax year at least gives you a chance of paying less tax.If the payment is made after 5 April 2012, make sure it is put through the payroll. If it is, you will pay some tax at 50% because of the way the PAYE system works. If it is made and shown on your P45 and you get another job you can hand the P45 to your new employer and the excess tax will be repaid to you throughout the tax year in your pay. If it is paid to you after you leave, more of it will be taxed at 50% as you will be given no personal allowance and an 0T M1 tax code will be used. Either way, you can make a claim for repayment of the excess tax on form P50 if you consider that you won't be working again in the 2012/13 tax year. Some people do it regardless. Otherwise, if the payment is made post P45 you will have to wait until the end of the 2012/13 tax year to get the excess tax back. Let me know if you have any further queries.
Inc Tax, CGT, Corp Tax, IHT, VAT.