Well finally out of Royal Mail and they didn't disappoint right to the end. After they gave me the 30k tax free that everyone gets, they proceeded to tax the rest of the full amount of redundancy pay with 40% tax. Are they stupid or what? I have only worked two months this tax year, even with a large lump sum, they still should have allowed for my personal tax allowance and then @ 20% up to the limit I would have had to start paying as a higher rate tax payer. I have never been a higher rate tax payer. Anyway my question is, after calculating my tax on the tax website I have overpaid about £9000 in tax. How do I get this back?
Also if I got back the tax rebate and also wanted to put some money into a SIPP (as technically this year I am a higher rate tax payer), do i get my tax rebate for the £9k and also be able to put 20K into a SIPP and get 40% tax relief on that also? Sorry not sure how it works. Also I thought redundancy wasn't classed as earnings but it says on my pay slip 'earnings so far this year' with redundancy payment on it and the full tax? sorry for so many questions
It sounds to me as if HMRC have assumed that the amount you received was your normal monthly pay and so taxed you on the full amount. It is relatively common and they do have a P50 form that you can fill in to reclaim the overpayment of tax.
More info here: https://www.gov.uk/government/publicati ... orking-p50" onclick="window.open(this.href);return false;
Or if you wait until the end of the tax year you should automatically get a refund.
As I understand tax relief, you only get 20% automatically but you have claim the other 20% from HMRC if you are a higher rate tax payer.
More info can be found in this article: http://citywire.co.uk/money/how-to-clai ... on/a579313" onclick="window.open(this.href);return false;
Yep don't panic, it was the same for me. I'm 50 but am not going to work again for this year at least so I will get my refund next April. I am mor than happy about that. You will get everything you are entitled to so please don't worry.
I hope you are as happy as me pal, I've been left 5 weeks after 31 years and I already feel like I never worked for them. I miss them just about as much as they miss me lol.
Don't forget to fill in your shares paperwork or they will cash them and send you a cheque minus the tax.
The pension centre will shortly send you a statement outlying your benefits at 60 and the new pension pot which you will get when your 65.
Thanks for the replies. Will try to claim it back now and invest it instead of it lying in the taxman's bank account until next April. And yes there is life after royal mail. Done over thirty years and to be honest I'm glad to see the back of it.
Sorry 35wayno should have asked. What do you mean about the shares and royal mail cashing them in and sending me a cheque minus the tax. What is the tax and can I not just leave the shares as they are and cash them in when everyone else can ie next year?
casp21 wrote:Sorry 35wayno should have asked. What do you mean about the shares and royal mail cashing them in and sending me a cheque minus the tax. What is the tax and can I not just leave the shares as they are and cash them in when everyone else can ie next year?
its a good time to cash them in at 5 pound a share why wait ?
casp21 wrote:Sorry 35wayno should have asked. What do you mean about the shares and royal mail cashing them in and sending me a cheque minus the tax. What is the tax and can I not just leave the shares as they are and cash them in when everyone else can ie next year?
As you are a 'good leaver' you won't have to wait for the 3 or 5 year mark before you can sell them and you won't have to pay tax or NI on them either. Instead you should get a form at some point asking if you want to sell your shares now or keep them invested or maybe a bit of both. I think if you don't tell them, then they will automatically sell them for you but you'll have pay the tax & NI.
You can apply for the tax after 4 weeks of leaving work, the link I gave will provide more info.
The maximum you can pay into any pension in one tax year is equal to your earnings for that year, so you should be able to pay in what you got in VR minus the initial tax free amount(£30k).
Thanks Roberts , you have been a great help. Something that Royal Mail should really help with, they don't really provide any support and you have to chase up everything yourself.
Robert I have read now on the government tax website that they will only give a tax rebate if I don't claim job seekers allowance. If I claim jobseekers i would have to wait until April 16 to claim the rebate. So the delinema is, do I claim the contributuion based jobseekers for six months that I am entitled to after redundancy or not claim jobseekers and claim the rebate. Job seekers is around £1700 over six months then nothing or 9k now? But then again job seekers now and the rebate next year? Also I do intent to look for work but then again could now be taxed at the higher rate for the rest of the financial year.
At 63 I took VR in April 2014 and HMRC taxed the part of the lump sum over £30K at 40%. This is because under PAYE HMRC tax you for each month as though you will earn that amount every month. I was taxed over £6k on £16K (£46K VR lump sum). I tried to claim the overpaid tax and despite telling them I was retired and my only income was my £9K royal mail pension they refused to pay a lump sum rebate but they did stop taking tax from my pension and I had to wait to the end of the tax year (April 2015) when I could do a tax return for the year before claiming my rebate. You may have difficulty getting a full tax rebate immediately because you might work again this year Your VR over £30K counts as earned income and can be put in a personal pension or SIPP, as well as any other earned income you receive in the 2015 - 2016 year. You can claim tax relief of 20% on contributions to your SIPP ( not 40% unless your total earnings for the 2015 - 2016 tax year is over the higher rate tax threshold ) . Remember to only put in 80% of your earned income because HMRC add 20%. So if your earned income for the 2015 - 2016 year was £20K you could put in a maximum of 16K into your SIPP and HMRC would add £4K tax relief making your SIPP worth £20K.
casp21 wrote:Sorry 35wayno should have asked. What do you mean about the shares and royal mail cashing them in and sending me a cheque minus the tax. What is the tax and can I not just leave the shares as they are and cash them in when everyone else can ie next year?
As you are a 'good leaver' you won't have to wait for the 3 or 5 year mark before you can sell them and you won't have to pay tax or NI on them either. Instead you should get a form at some point asking if you want to sell your shares now or keep them invested or maybe a bit of both. I think if you don't tell them, then they will automatically sell them for you but you'll have pay the tax & NI.
Just thinking Robert, wouldn't the shares be classed as income and added to the income Casp has already obtained from his VR payment ???
Shares are not classed as income but the dividends you receive from those shares are taxable income. However dividends are received with the benefit of a tax credit which means that if you are a basic rate tax payer (most postmen) you will have no further tax to pay on the dividends. As Robert said if you accept VR you are classified as a "good leaver" and you can sell your shares immediately and pay no income tax or national insurance. If Casp sells his shares the proceeds will not add to the income the he receives from his VR payment.
Might now just hold onto the shares. I sold some I had bought as a colleague and sold then two months ago at 4.43. They are up 80p a share in two months.
