Being made redundant and my SMP is being paid in a lump sum leaving me with a much bigger tax liability. Is that legal?

[Jaylar]

My 15 month contract expires at the end of this month (my employer terms this as redundancy). I'm nearly 7 months pregnant. I've just been told by e-mail that I will get my SMP as a lump sum together with my final salary on my last pay day, next Friday.

I've not heard of any other company doing this. I work for a large University. Apparently it has just been introduced to cut down on Payroll's admin. They want me off their employee books asap.

But this means I get paid a massive amount in this tax year and will get taxed accordingly, missing out on the next financial year's tax allowance. It also means that if I return to work with another employer within the 9 months (a strong possibility) I'm going to have to repay the money that was advanced and that Im being overly taxed on, and which I didn't ask for in the first place!

I wasn't consulted about this and I have just complained to Head of Payroll and HR. But given the pay gets processed next Monday I'm not sure I can do anything abpout it and the tax will come off at source.

Has anyone out there have experience of this? It seems grossly unfair to me that their new "procedure" is going to cost me hundreds of pounds of what I am legally entitled to as my monthly SMP.

Desperate for any advice. Can I make them recompense me?

that does seem very unfair.
I thought redundancy payments are exempt from tax up to a certain level... could be completely wrong!!

try here

umm if you overpay the tax you can get it back (not very helpful-sorry)

have you thought about calling inland revenue

TBH I think you are liable for tax in the yr it is paid which does seem unfair sorry

Yes, it happened to me. I got my last month's pay, redundancy pay and SMP in one lump sum. It didn't bother me that much ad it was at the end of the tax year.

AFAIK it costs companies more in national insurance payments if they pay it in a lump sum, which is why most companies don't do it.

Sorry beginning of tax year, so same amount in tax overall for me, but less in national insurance for me.

It isn't actually redundancy pay, just SMP so I will be liable for tax. Apparently there is nothing I can do about it.

It just means that I'll be £300 worse off as a result. Grrr!

If you pay too much tax this can be reclaimed. However Ni can not and it will be much higher on a lump sum. The same thing happened to me in 2007.

That doesn't sound right - hopefully you'll be able to claim it back as essentially you are paying tax in advance. Although it will depend on how much you end up earning in the 2011/12 tax year (i.e. if you earn more than your personal allowance in that tax year, this won't be £300 extra tax you'll be paying, just £300 tax you're paying earlier than you need to). If you earn nothing, or less than your PA in 2011/12, you'll be able to claim the whole £300 back.

I wrote to the Ni contributions office to try to reclaim my Ni but was told I didnot have a leg to stand on