Hi all,
Client received a redundancy payment from the Insolvency Service in the sum of £15K. Below £30K, so covered by the exemption, however am assuming it still needs to go on the Tax Return? (Got a bit of sudden brain freeze today).
Thanks.
Replies (11)
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Are you sure it's covered by the exemption? If it was, why would it need to go on the tax return?
Was the payment entirely for redunancy? Or was it for redundancy, wages, holiday pay, PILON and so forth?
This deserves a variation on the usual response to VAT questions ... in this case (as it's not about VAT): "What was paid by whom for what?"
... but with a deal more precision in the answers.
Take a look at https://www.gov.uk/government/publications/redundancy-payments-from-the-... ... you may even find that the sum is after some Tax/NIC deductions!
If you're sure about what it's for (and that there's no Tax already deducted), then why wouldn't you put it in the same box 9 page Ai2 that you've always used when the payment was "made directly by the employer"?
[I'm assuming you mean the section on page Ai2 headed "Share schemes and employment lump sums, compensation and deductions, certain post-employment income and patent royalty payments" - which is not concerned with who paid it].
I suppose it might be asked for the purpose of those payments over £30,000 - to work out the taxable porition.
There are others who can provide more reliable and technical answers than me (I've still got so much to learn myself) but as I read it (ITEPA), it's not taxable under s62 as earnings unless s401 brings it under earnings, which it only does so if over £30,000. I'd also check s404.
There's the pragmatic/easy answer of checking what hmrc have. Easy might not always be right but in the circumstances, I'd say it's pragmatic.
The point (as gillybean and Hugo make) is that payments below £30k may be taxable, or taxable in part. The threshold applies only to amounts not otherwise taxable.