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I was made redundant mar/31 yet my small pension was taxed

Resolved Question:

I was made redundant mar/31 yet my small pension was taxed @ 40% for year 2014 why.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

Could you advise
1) What your final pay to date was at 31/03/2014 and the tax suffered
2) Whether you had any company benefits up to 31/01/2014 for the tax year 2013/2014 (such as company car/fuel/medical benefit etc)
3) Whether you were paid a lump sum redundancy payment - if so could you advise the date it was paid, how much it was for, and how that sum was made up (as sometimes its part redundancy, part salary owed in lieu, holiday pay. bonuses etc) and what tax was suffered
4) When your small pension began - and how much you were paid for the tax year 2013/2014 and what tax was deducted from the pension provider (as per the P50)

I can then advise further

Thanks

Sam
Customer: replied 2 years ago.

£40091.97...tax.£7087.78...I was paying tax on company vehicle...30/3/2014...£13275.00...no tax...pay plus holiday pay plus bonus £3964.00...tax £1474.15...august 2013...£627.90 tax £106.80..

Expert:  Sam replied 2 years ago.
Hi

Thanks for your response

As your total taxable income (except the lump sum tax free amount of £13275) exceeds £42475 - then some of your income needed to be charged at 40% tax.
You have not provided the company car figures, but even without it your total income amounted to £44682 (so £2207 in excess of the 20% rate band)

That,s why your pension suffered 40% tax.

Hopefully its now back to just suffering 20% tax, if your income for this tax year is going to be below £42475 -

Let me know if you have any follow up questions

Thanks

Sam


Sam, Accountant
Category: Tax
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Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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