Have Tax Questions? Ask a Tax Expert for Answers ASAP
Can you tell me which tax year your redundancy etc payments are treated as being paid in, either 2015/16 or 2016/17 please. Is the £30,000 tax free payment part of the figure of £101,513.30 or an additional to it? Are you sure the tax code on your pension is DM1 M1 and not D1 M1? What figures have you included in your 2015/16 tax return? Can you explain what you mean by "but it looks like they are not going to do anything until 2017!" Did you receive separate P45s for your final salary and the leaving payments?
Leave this with me while I draft my answer.
HMRC will not act on a tax return for 2016/17 as the tax year doesn't end until 5 April 2017.
You need to make a claim for an in-year tax repayment. Complete a form P50 and send it to HMRC with any documents it asks for. Keep copies of any paperwork that you send to HMRC. This will allow them to process a tax repayment for 2016/17 after they have verified the figures with your former employer if you are overpaid which you almost certainly will be because of the way that post P45 payments are now taxed through PAYE. In effect, many people will pay too much tax initially and will have to reclaim the excess. The old system which limited tax deductions on such payments to 20% means that many people didn't pay enough tax and by the time they got a tax bill, they had spent the redundancy or paid off all or part of their mortgage or used it for other purposes. HMRC had to write off many millions in tax.
As for your current tax code, if you look here, you will see that a D1 M1 code means that you are paying 45% tax on your pension. Call the tax office and ask them to change this to a D0 code which will reduce the tax charge to 40%. You will be a 40% taxpayer for 2016/17 as your income will be over £43,000. You are probably overpaid by about £11,000 on the redundancy alone., ie ignoring the pension.
I hope this helps but let me know if you have any further questions.
Thanks. Good luck with the claim.
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