Reader's Question:
My redundancy package is tax free as the amount when payable falls into the non-taxable category, I will not have any taxable element, but I have had an advance from my employers against my redundancy non taxable settlement. the question is - will they be able to deduct tax from the part they have advanced me when they take back their portion although it was from non taxable settlement?
Your response will be appreciated.
Beverly
My response:
Bit of an odd one this. So odd that I ran it by a tax accountant friend of mine.
If I'm reading your question correctly you are going to be made redundant in the near future and your redundancy payment will be under the £30K threshold and therefore tax free.
However, it seems that you have been paid part of this in advance of the actual date your contract ends and possibly continued to work under normal terms (although this is not clear).
Normally you are paid your redundancy once you have finished, with the payment often in the final payslip. However, as long you have received a redundancy statement from your employer showing the amount, and how it was calculated, you will likely be OK and your redundancy will be tax free.
Also make sure you read my article Reader’s Question – How can I avoid paying tax on my redundancy payment? for more information on income tax and redundancy payments.
I hope that helps
Best wishes
Damien
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