Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
There are two parts to your question.
Firstly severance pay; 30K of this is tax free the rest charged at your marginal rate of tax. 470K will put you into the additional 45% rate of tax for sums over 150K. Furthermore, you will loose your personal allowance at the rate on one pound for every two quid over 100K so you will loose the lot, sorry.
The refund of your legal costs is outside the scope of UK taxation, is not taxable and need not be declared on your annual self assessment tax return.
Like the curate's egg, some good news some not so good, but you have to earn it to be taxed on it! You could reduce your liability by making contributions to a private pension scheme, 40K this tax year including employer's contributions. In some cases you can go back three years to mop up unused contribution levels, but be careful not to exceed the maximum pension pot allowed. Currently the lifetime allowance is 1 million.
I do hope that you have found my reply of assistance.
No, severance pay is 30K tax free, balance at your marginal rate of tax even if your employer has to be dragged screaming and kicking into the payment process.
The VAT input tax on your legal costs would be reclaimable in the normal way. As you had to fight to receive it then the bill net of VAT would be allowable against trading income thus you would receive it free of tax automatically.
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I would love to be able to accept a phone call, but I am operating just now from a country 6 hours ahead of BST so costs would be prohibitive.
I will be back in the UK by Friday. In the meantime you can still follow up and I will respond.
Post to clear my question list only.
It is a redundancy payment so it does.
No, it will be a business expense as part of yyour trading income as a business consultant.
Thank you for your support.
If you want to phone me I am on 01750 725420, but will not really be compos mentis until Saturday after an overnight flight to Frankfurt and a 5 hour wait for a connection!