Capital Gains and Redundancy lump sum

[redundantdh]

Hello
Dh's employers have offered a lump sum settlement which is tax free. Does anyone know whether it is subject to Cap Gains tax - and if not - where does it go on a tax return?

Thanks

No - not subject to capital gains.
The first £30,000 of any compensation (i.e. non-contractual payment) is tax free. Anything over £30,000 will be subject to income tax.

No idea where it goes on the tax return. No doubt the Revenue helpline will be able to tell him.

according to this site it is tax free up to £30000 and there is a help sheet IR204 from the Inland Revenue that tells you how to complete the tax return.

Awesome.
Thanks.

Quick note of caution - tax status of payment will depend on exactly what it is for. So if DH was entitled to 4 weeks notice under his employment contract and lump sum includes something towards that, that amount would be a contractual payment relating to his employment and would be taxed as part of his employment income, I think. Agree Revenue probably bestplace to start.

The treatment of notice pay is actually a bit more complicated than that Itsthatwooluff. Sometimes even payment in lieu of notice can go into the tax free money (if there is no contractual clause permitting the employer to pay in lieu of notice and no standard practice of doing so). Your explanation is 100% correct if there is a payment in lieu of notice (PILON) clause.

OP - You never pay capital gains on redundancy pay, as MrsHappy says. If any of the money is taxable, it is taxed as income rather than capital.

I would agree with the advice to speak to the Revenue, but I would ask the employer to explain the tax first. I THINK that the £30k doesn't need to go on the tax return at all, but I'm not a payroll specialist, so I'm just going from memory on what a payroll adviser once told me. I wouldn't rely on my comment on that bit!