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bigduckontax, Accountant
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Ive just been made redundant on May 14th With 3 months gardening

Customer Question

I've just been made redundant on May 14th
With 3 months gardening leave my last day is August 14th
As i am paid on the last day of every month I should receive 3 and a half months money.
My company has paid but i feel it is severely short.
Do I get taxed more if this a lump sum or should I get exactly what I'd get if I was given the money monthly?
My tax code is 999L and sit in the higher rate of taxation.
Hope you can help?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

Right, well firstly any redundancy money is tax free for the first 30K and above that at your marginal rate of tax. So that disposes of that problem before you ask!

The low pay as at the end of the gardening leave is almost certainly due to the workings of the PAYE system. As you probably know this is designed to make you tax neutral by the end of the tax year. If your emoluments go through at a steady rate without many fluctuations it's rather good at it. However, the 3.5 months cash in one lump will make it think that for the rest of the year salary will be at this sort of level and will deduct too much in the month of payment. Normally, of course, this would adjust next month as your new employer starts to pay you using data from your P45, but that maybe is is not going to happen. If you are going onto a pension the pension provider will do the same and adjust it automatically, again through PAYE. Otherwise you have to approach your tax office with a view to the matter being corrected as an in year adjustment. You are advised to do this by letter, a second class stamp being considerably cheaper and less frustrating that hanging about on the end of the telephone waiting for HMRC to answer if they ever bother to do so anyway! Telephoning is an exercise in administrative futility as we are all aware from media comment.

I do hope I have helped you with your problem, however, it is a case of 'Hurry up and wait!' It should all come out in the wash in the end.
Customer: replied 2 years ago.

Thanks Keith


Should my employers have given me the option of either receiving the lump sum or continued with the monthly payments ?

Expert:  bigduckontax replied 2 years ago.

With hindsight, it would have been better to just keeping up the monthly payments. Then this wild flutter would not have occurred.

 

It's spilled milk, I'm afraid!

 

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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3369
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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