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: 13997
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

I was made redundant very recently, towards the end of the

Resolved Question:

I was made redundant very recently, towards the end of the tax year. I was on a long notice period (one year), so my redundancy payment and pay in lieu of notice was a substantial amount, in fact more than a years pay. This meant that within the tax year I 'earned' twice as much as my usual salary, which I think bumped me into a higher tax band.
Of course, the redundancy payment is to meet my living expenses for the next year. As it happens, I am planning on returning to full-time education for the next year, and so I will not be earning anything in this coming year. It seems wrong, and unfair, to have paid a higher rate of tax on money that I won't 'use' until this coming year.
Example. My salary is £90,000. I earn that £90,000 for almost the entire year, then in March, I am 'paid' another £90,000 for a year's notice when I am made redundant. I have now earned £180,000, a sum which has been taxed at a higher rate.
What can/should I do about this? I wanted to fill in my Self Assessment and and say that I only earned my actual salary, yet paid a huge amount of tax (which I did), this would then leave me with a huge tax refund, some of which I will presumably have to pay next year, some of which is presumably monies that I have actually overpaid and can keep.
Thanks!
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.I completely understand your frustration but sadly the law states that tax is due on the money for the date is is paid - and that means the full £180000 must be declared as paid within the period 6th April and this 05th April Had you sought advsie prior to today - I would have suggested that one way to mitigate some of the tax would be to place some of this money into any pension plan arrangement you had - but of course this would only have been viable had you the money to spare and it sounds as if you plan to use this money to live off for the coming year. Or I would have suggested that you ask your employer to have made the redundancy payment after 6th April so that it fell into the new tax year - is this possible at this stage ? That they can adjust the payment date and documentation? Let me know if I can assist further ThanksSam
Sam and other Tax Specialists are ready to help you