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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I needs some advice on Tax - I was made redundant in

Resolved Question:

I needs some advice on Tax - I was made redundant in November 2015 , my exit package was paid in 2 amounts. The first payment was made up of Salary in lieu of notice , Holiday pay , & Statutory redundancy - The statutory redundancy was exempt of tax , The second payment was an Ex gratia amount and part of this was also tax free ( statutory and part ex-gratia was tax free to limit of 30k ) , a p45 was issued but this does not include my ex-gratia payment. I started work again in January 2016 . a P60 was issued in April but this also does not show my Ex gratia payment. I have started to fill in my self assessment form on line and want to check whether the tax is correct - my understanding is that if an ex gratia payment is paid after a p45 is issued it is taxed differently (10% , 20% , 40 , 45% etc ) Also I have noticed that my previous employer was using a K tax code ( K196 ) I was earning >£120k a year , didn't owe any tax and all company benefits were being taxed through Payroll - Should the employer have notified HRMC that they had started doing this for the last 3 years ? Advising them to amend my code ? Can I claim tax back ? my new employer is using a OT code , yet my salary is now <122k a year , am I not entitled to a full personal allowance ?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

Post P45 payments are taxed using a 0T Month 1 tax code. This means that, depending on the size of the payment, some of it may be taxed at 40% or 45% even if the taxpayer pays tax at 20%. This ensures that HMRC won't be left short as they were under the old rules for such payments and it also means that the taxpayer has to claim any excess tax back. You need to get in touch with your former employer to get the taxable redundancy gross and tax figures. HMRC may have them too as we are two months past the end of the 2015/16 tax year. Call them on the number here. Use boxes 5, 6 and 9 of the share schemes and employment lump sums section on page Ai2 of the SA101 pages here to report your redundancy payments if none of it was in your P45 or P60 figures.

As far as your current tax code is concerned, you lose £1 of your personal allowance for every £2 you earn over £100,000. If you earn £122,000 or more, you will have no personal allowance. If you earn between £100,000 and £122,000, you will be entitled to some of the allowance. Call the tax office to have your code reviewed and changed if necessary based on what you earn. An employer is not responsible for checking tax codes. That is the employee's responsibility.

I hope this helps but let me know if you have any further questions.

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Customer: replied 1 year ago.
That's perfect. Thanks for your help