How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Sam Your Own Question

Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13704
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
16196420
Type Your Tax Question Here...
Sam is online now

, My company recently went into administration and I have

Resolved Question:

Hello, My company recently went into administration and I have been listed as creditor by the admin firm. The funds owed to me are my redundancy package and I would expect to receive these tax free up to the standard 20 k amount. If I sell the amount I am owed to a third party for a much smaller amount of 15% of total value, will I have to report it as redundancy or as general income to HMRC? Could I be taxed 45% on the pay out since it is not a PAYE payment? How would I report this income to HMRC?
thanks
lisa
Submitted: 1 year ago.
Category: Tax
Expert:  Nicola-mod replied 1 year ago.
Hello,
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 1 year ago.

Hello

Please do continue to search. My deadline is April 17th

thanks

lisa

Expert:  Nicola-mod replied 1 year ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Expert:  Sam replied 1 year ago.
Hi
My name is ***** ***** I am one of the UK tax experts here on Just Answer.
Can you advise how this would work - do the company (in liquidation) then honour your debt directly with this third party
Who is the third party - are they a business than handles loans such as this - and what advise do they give regrading this loan.
Thanks
Sam
Customer: replied 1 year ago.

Can you advise how this would work - do the company (in liquidation) then honour your debt directly with this third party - YES

I give up all rights to any funds owed me by the admin firm of my company

Price Shares assumes the role of creditor and I get a cash payout.

The amts are not huge. I am owed 36kGBP redundancy, the offer is 15% of that amount.

The firm making the offer is american

http://www.primeshares.com/

thanks

lisa

Expert:  Sam replied 1 year ago.
Hi
Thanks for your response and the additional information.
Then you will be considered as taxable under the redundancy payout itself - rather then any further tax through this company(as the company will deal directly with the liquidating employer)
So the liquidator will pay you redundancy less the £30K tax free and then charge you tax on the remainder, (which you advise will be £6K - £36K less £30K tax free) this will then be charged at your highest rate of tax, as your employer should use code OT
But as its usual for the payment to be made after employment has ceased and the liquidators are handling this then you may find they only charge basic rate tax on the £6K
Then you will cover the costs of the 15% charge for this third party purchase (so will in fact receive £36K less tax due on the £6K - and then there will be the 15% charge - and then from the remaining balance any payment still due - which can be made to you.
(It may be that the charge has been calculated within the amount advanced to you - but they may not have taken UK tax into account of the £^K as a USA company.
But the 15% charge is not a taxable deduction as this is a personal way you wish to take matters forward and this charge is not a an expense that can be considered through employment
Let me know if you have any further questions on this matter
Thanks
Sam
Customer: replied 1 year ago.

i am sorry I really don't understand your answer. If I sell my rights to the 36k in exchange for 15% of the total value, approx 5400 GBP and I receive these funds. Those funds come from that third party, prime shares. This is a payout in cash. How do I report this to HMRC and how much tax will I pay? I think you may have misunderstood my question, I am not selling 15% of 36k, I am selling the 36k potential payout to a third party in exchange for an up front paymt of 15%.

thanks!

Expert:  Sam replied 1 year ago.
Hi
I am afraid you will be taxed on what you were entitled to from the liquidated company not what you agree to receive from the third party!
So you report the redundancy payout, and any tax deducted from the payment THEY make, the third party position has no bearing to HMRC at all, nor on you for UK tax purposes.
You then are treated as having been paid £36K less any tax suffered - the first £30,000 will be tax free - and the remaining amount liable to your highest rate of tax (less tax suffered) - and if a shortfall of tax - you pay the difference to HMRC, and if you have paid too much - then a refund from HMRC
There is no recognition of the arrangement that you choose personally to pursue.
Thanks
Sam
Customer: replied 1 year ago.

Thank you for reverting, so I understand that HMRC will automatically collect taxes from me on any payout when and if it happens?

Expert:  Sam replied 1 year ago.
Hi
Thanks for your response - I am glad you are now able to make sense of the fact your arrangement has no bearing on the actual tax point arising, which is one simply of redundancy and tax due on said redundancy (after relevant tax free amounts are considered)
As for the tax position, not quite - your company (which is now going to represented by the liquidator) will make a tax deduction according to HMRC remit,from the redundancy payment> This SHOULD be at your highest rate of tax - however many employers misinterpret the code OT meaning and furthermore you have the liquidators acting as proxy to make good your entitled amount SO they may just just collect (deduct) tax at 20% -
This being the case, then if your tax rate for the year in question is in fact higher than 20% - then you will have to report this to HMRC the year end - for them to assess whether any additional tax is due.
It may well be that you already complete self assessment for HMRC each year - if so then you add this redundancy payment along with the figure of any tax suffered from the employer, in with your other income declarations for that year.
Let me know if you require any additional information with this matter.
But it would be appreciated if you would take the time out to rate the level of service provided, as this will ensure that Just Answer credit me for my time.
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13704
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.