Tax advice on redundancy pay

[walm]

I was told in August that our office would permanently close in January and to start looking for alternative employment.
My company was offering no severance or whatever, BUT would continue to pay me monthly up to end December.
Since then I have spent the time looking for a new job (and surfing PH) using the computer facilities in the office.

My understanding is that up to £30k of severance is not taxed.
Is the August-December monthly pay severance?
Can I claim the PAYE tax back?

Many thanks in advance (probably to Eric).

[Soovy]

Payment of wages (and payment in lieu of notice) is taxable as usual.

A lump sum of redundancy is tax free up to £30k. Sorry.

[Dirty Boy]

walm said:

I was told in August that our office would permanently close in January and to start looking for alternative employment.
My company was offering no severance or whatever, BUT would continue to pay me monthly up to end December.
Since then I have spent the time looking for a new job (and surfing PH) using the computer facilities in the office.

My understanding is that up to £30k of severance is not taxed.
Is the August-December monthly pay severance?
Can I claim the PAYE tax back?

Many thanks in advance (probably to Eric).

Obviously you're entitled to statutory redundancy based on your length of service restricted to a higher limit.

Assuming you're entitled, then they should pay you that amount up to £30k tax free.

If they've made you redundant from August, and you've not worked since then, then I suppose in theory what they're paying you could be classed as redundancy. Have they been making PAYE/NI deductions on those payments?

Also, depending on your employment circumstances through to 5 April 2009, there is potentially a tax refund, but can't say until that date as you may work again during the tax year.

[Dirty Boy]

Soovy said:

Payment of wages (and payment in lieu of notice) is taxable as usual.

A lump sum of redundancy is tax free up to £30k. Sorry.

Interesting.

So is the redundancy still due (if entitled?)

[Dupont666]

what is a payment in lieu?

Im trying to find out off my company as im getting one at roughly 5k for consultation and wanted to know if it can be classed as the payout or if its wages (just sasys standard deductions apply).

If the payout then i can include as part of the forgo of redundancy section and place into pension tax free, if not then i guess i will just pay tax and keep it.

[walm]

Soovy said:

Payment of wages (and payment in lieu of notice) is taxable as usual.

A lump sum of redundancy is tax free up to £30k. Sorry.

That is the question though. They aren't really paying me wages, since I am not doing any work.

If it has to be a lump sum, could I at least claim the last month?

[obstreperous]

May be some help here .

http://www.cv-service.org/redundancy-payments.htm

[fido]

walm said:

Soovy said:

Payment of wages (and payment in lieu of notice) is taxable as usual.

A lump sum of redundancy is tax free up to £30k. Sorry.

That is the question though. They aren't really paying me wages, since I am not doing any work.

If it has to be a lump sum, could I at least claim the last month?

recall having this debate with HR, and they referred me to the employer handbook which stated that notice was taxable (overruling my contract of employment, which said otherwise). gave up arguing with them, but when i received my termination payslip, it was shoved into a non-taxable category. result.

[AL...Ease]

I've wondered about this as well, I was told to pack up on Friday with no notice and I'm not working again. Am I entitled to my month's notice being paid even though I am not working it? I've only been there for about 14 months so I know I'm not entitled to any redundancy pay.

[Eric Mc]

The law on whether final payments are taxable or not is actually very complex and not very clear. Liup sums on termination of employment may be tax free up to £30,000. The important points are:

it must be a lump sum

it must be on termination

it cannot be for services rendered i.e. it must be ex-gratia

If you are still on site and available for work, I would argue that you are still AT work (whether working or not) and therefore your employment has not officially terminated. Therefore any payments you are receiving at the moment still count as wages and should be taxed in the normal way.

[Dupont666]

what about the in lieu payment after your services have been terminated, is that classed as a simple taxable wages type of payment or can i include that in the lump sum and put it into my pension tax free?

[Soovy]

AL...Ease said:

I've wondered about this as well, I was told to pack up on Friday with no notice and I'm not working again. Am I entitled to my month's notice being paid even though I am not working it? I've only been there for about 14 months so I know I'm not entitled to any redundancy pay.

If your contract says one month then you are entitled to be paid your salary even though you are at home.

[walm]

Eric Mc said:

The law on whether final payments are taxable or not is actually very complex and not very clear. Liup sums on termination of employment may be tax free up to £30,000. The important points are:

it must be a lump sum

it must be on termination

it cannot be for services rendered i.e. it must be ex-gratia

If you are still on site and available for work, I would argue that you are still AT work (whether working or not) and therefore your employment has not officially terminated. Therefore any payments you are receiving at the moment still count as wages and should be taxed in the normal way.

I knew you would hit the nail on the head. Many thanks, Eric.

It sounds like the best I can hope for is to ask them to pay me for December on December 1 and continue to look for work from home not in the office. Then make sure the P45 has Dec 1 as termination date.
Then the Dec payment would not be taxable.

[Eric Mc]

Makes sense to me.

[AL...Ease]

Soovy said:

AL...Ease said:

I've wondered about this as well, I was told to pack up on Friday with no notice and I'm not working again. Am I entitled to my month's notice being paid even though I am not working it? I've only been there for about 14 months so I know I'm not entitled to any redundancy pay.

If your contract says one month then you are entitled to be paid your salary even though you are at home.

Cheers Soovy... When did you change your name?

[spikeyhead]

AL...Ease said:

Soovy said:

AL...Ease said:

I've wondered about this as well, I was told to pack up on Friday with no notice and I'm not working again. Am I entitled to my month's notice being paid even though I am not working it? I've only been there for about 14 months so I know I'm not entitled to any redundancy pay.

If your contract says one month then you are entitled to be paid your salary even though you are at home.

Cheers Soovy... When did you change your name?

When he nearly, but not quite, traded in his Pork.

[Soovy]

[AL...Ease]

I know it's a bit late in the evening to be asking this, but someone's just suggested to me that because the company has entered the 30 day consultation period I should be entitled to pay until the end of the consultation period followed by paid notice, is this correct, or am I being led on?

I've got a meeting with my boss tomorrow morning at 10:30am where I guess they should tell me the ins and outs, but I'm worried that they might get it wrong...

ETA: They've told me I am.

Edited by AL...Ease on Thursday 27th November 11:14