Taxing severance payment + personal credits

Z

zippitydooda

Registered User
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Hi folks,

I'm currently reviewing the taxation on a dismissal settlement from my employer. The payment is going thru in Jan (should have been December but Hr contact is a bit mindless and got the calc wrong a few hundred times!) - so this is my only payment so far this year (should get another job by May methinks).

Anyways - the taxable element after SCSB relief is taxed at 41% and heath levies at 2.5%....my question is whether tax credits should be applied to this payment or does it fall outside this system?

Finally - do I have to wait until December to get a P60 and claim top slicing or can I do it right away?

Thanks for your help!

Z
 
Top slicing can only be calculated after year end so it will be january next year before you can claim it. You will be allowed one month's credits and cut off against this payment.
 
I just called the payroll provider - they processed the payment in January (shows M1 of tax year 2008) but she taxed it at 41% with no personal credits because
1. the new taxcert has not yet been released - so 40% for 2008 cannot be applied
2. this is a 'supplementary payment' and not a payment in relation to employment (according to this payroll person) and therefore no credits can be offset against it - is this accurate?

Also she said a supplementary P45 would be sent to me showing the payment going thru for the 2007 taxyear (!) - so I should use this to claim Med1 etc as I will not get a P60.

Seems to me she's waffling a little coz on the one hand she says the new taxcret can't be applied for 2008 and then on the other hand she says its being treated as a 2007 payment....

Now I'm confused - anyone have a better idea of whether this advice is correct or not (the payroll company has a history of being a little out on these things!)

Thanks again

Z
 
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