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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13778
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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We have come to an Agreement with one of our directors to part

Resolved Question:

We have come to an Agreement with one of our directors to part company with us. We have the following questions regarding the severance payment:
1. Is a termination payment made on 29 April 2016 considered for taxation in the 2016/17 tax year?
2. If this payment is made before the P45 is issued (so that “PAYE must be operated in the normal way”) what tax would be deducted?
3. If too much tax is paid, can a P50 be used to claim a refund (Assuming the individual does not become employed again within 4 weeks)?
Can you help with these queries please?
Many thanks
Caroline Owen
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer. In answer to your questions1. Is a termination payment made on 29 April 2016 considered for taxation in the 2016/17 tax year?Yes it is - as the payment is deemed to be liable to tax pretaining to the date it is paid. 2. If this payment is made before the P45 is issued (so that “PAYE must be operated in the normal way”) what tax would be deducted? The taxable amount would be added into the final pay due and tax deducted at the appropriate rates for Month 1 of 2016/2017 (so tax of 40% and 45% may arise due to the positioning of the payment in the tax year calendar) 3. If too much tax is paid, can a P50 be used to claim a refund (Assuming the individual does not become employed again within 4 weeks)? Yes as the ability to claim via the P50 just looks at the revised tax due at that later period of time (bit there can be no other income and no benefits claimed) Let me know if I can assist further- I am bout to meet with clients but will be bac online as soon as this meeting is concluded.Thanks Sam
Customer: replied 1 year ago.
Thank you, ***** *****
The description of tax deductions in 2 seems to be very similar to the deductions applied if the payment comes after the P45. Possibly the only difference is that a 0T tax code is applied(?). If you can clarify further that would be helpful.Many thanks and kind regards
Caroline
Expert:  Sam replied 1 year ago.
Hi Caroline Yes - you are correct - any payment made after leaving (and the P45 having been issued) would have code OT X Week or Month 1 applied. Let me know if I can assist further - or it would be appreciated if you rate me (or click accept) to indicate the level of service you feel I have provided. Thanks Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13778
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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