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Another redundancy tax question

(4 Posts)
Paymeoffplease Wed 23-Feb-11 12:18:38

Have namechanged for this as under confidentiality agreement.

Am being made redundant and have been offered compromise agreement to include my redundancy pay and payment in lieu of maternity pay as part of the package.

The total is within the threshold for tax of £30k.
However my employer has said that hmrc might still chase me for tax. ( am guessing they mean on the part relating to my mater ity pay)

Is this correct? How will they know what the payment relates to? Won't it just be a lump sum?

Thanks for any advice

helencw77 Thu 24-Feb-11 18:27:45

Hello, I am in a very similar situation, I am 34 weeks pregnant and will find out on Tuesday if I am being made redundant or not (currently under the consultation period), it is 99% sure that I will go.

I have been told by HR that the maternity pay element of my package will be taxable as normal, they are also proposing paying in it a bulk, but have definitely said it will be subject to deductions. As they are legally obliged to pay it, and no doubt have to send off forms etc to reclaim it (the statutory SMP, not an enhanced version obviously) then I definitely think it is separate from the redundancy element.

I am hoping to persuade my employers to pay my maternity pay after the 6th April, otherwise it will push me into the higher rate tax band (I have two part-time jobs, so have income from another source), I think I will actually have the 31st March as my finishing date (that will be confirmed on Tuesday).

My redundancy package is 3 months notice (paid in lieu of notice) plus 20 weeks at full pay. That is tax free but the maternity element is separate.

If it helps, I can ask on Tuesday if they can include the maternity element with the redundancy pay, but I assume the answer will be no, as if it is called redundancy then I could still try and claim SMP from them (legally) - not sure if that makes sense.

Paymeoffplease Fri 25-Feb-11 08:22:51

Thanks for your reply am even more confused now lol.
Hmm interesting. My compromise agreement specifically says that the monies classed as severance pay ( which in this case includes money in lieu of maternity pay) wll mot be subject to taxation.

Ofmcourse in the sub clause below it states hmrc might not see it that way.
Good point about getting it paid after april 6th as don't want to paying higher rate of tax on it.

Finbar Fri 25-Feb-11 08:30:09

A good website for this type o info is the Directgov one. I'm sure you'll find some reassuring details there.
Good luck
(or the HMRC on too)

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