Leavers holiday pay taxed

[Mdshaw]

had to leave the business due to ill health, have just received holiday pay owed to me
Before stoppages came to 3800 but I had to pay tax of 1800 on it could somebody tell me why please

[RobertT]

If you think you've been over taxed then get in touch with HMRC.

https://www.gov.uk/claim-tax-refund

[wen2202]

Got done the same when finished through Ill health 4 years ago, paid £2700 out of £6000 odd, got in touch with HMRC was told that it is nothing to do with them, get back in touch with Royal Mail ( I didn’t), they have taxed you as one week! I waited until the end of the tax year and got it paid back from Royal Mail as wage slip, almost £3000 back.
Royal Mail do not pay their tax until the end of the year, their mistake, get it back.

[short bloke]

Did you get the annual leave payment at the same time as your IHR payment?

What can happen is, When you have the meeting to finalize the IHR, it should include 3 payments IHR lumpsum, Pylon, and any annual leave you are owed (assuming you have any) but sometimes managers don't prepare properly and don't include the annual leave.
So when you finally leave (last day of service) and your annual leave hasn't been included in your final wages. when they do pay it you end up on emergency tax. so if that's what happened you will need to contact HRMC to claim it back.
hope that helps

[Mdshaw]

Dear short bloke
That's exactly what happened it was 3 weeks between ill health retirement payment and holiday pay because bosses hadn't done paperwork.
I will contact them tomorrow

[97gaz]

That's normal when leaving on IHR. Because you've been paid after your P45 then you are no longer employed by them and you'll pay full whack on your annual leave payment. If you get another job, your tax will sort itself out. if you don't work again that year they'll pay you a rebate in april. I left in the October and just waited till April.

[short bloke]

That's normal when leaving on IHR. Because you've been paid after your P45 then you are no longer employed by them and you'll pay full whack on your annual leave payment. If you get another job, your tax will sort itself out. if you don't work again that year they'll pay you a rebate in april. I left in the October and just waited till April.

97gaz The problem is it shouldn't be normal, No last day of service should be agreed upon until you have all three figures and you are able to check they are correct, once the figures are agreed you make sure they have enough time to input before midday Tuesday (payroll cutoff day) and then you decide the last day of service. and they get all the money in one go and the member avoids emergency tax. it is pure laziness on the part of the manager. if the above doesn't happen refuse to sign the paperwork until it does.

[freespeech]

That's normal when leaving on IHR. Because you've been paid after your P45 then you are no longer employed by them and you'll pay full whack on your annual leave payment. If you get another job, your tax will sort itself out. if you don't work again that year they'll pay you a rebate in april. I left in the October and just waited till April.

97gaz The problem is it shouldn't be normal, No last day of service should be agreed upon until you have all three figures and you are able to check they are correct, once the figures are agreed you make sure they have enough time to input before midday Tuesday (payroll cutoff day) and then you decide the last day of service. and they get all the money in one go and the member avoids emergency tax. it is pure laziness on the part of the manager. if the above doesn't happen refuse to sign the paperwork until it does.

Pretty sure it's not emergency tax as RM have your tax code. The employer can only tax based on your earnings so if you get payouts they will be taxed. It's a simple procedure to go online to the tax office and declare you aren't going to work they they will send you the difference by cheque. My wife has just done this and it took about 6 weeks.

[fb1969]

I used to work in a job involving processing pay. This situation first came in something like 15 years ago as a direct instruction by HMRC. They stated that any payment made will be assumed to be a regular payment like regular pay was. If paid weekly it was assumed you'd get that every week, if paid monthly in was assumed you'd get it every month. Multiplying by week or month gave an assumed yearly figure, and you would be taxed based on that.

It happened to me as well when I left that job. I was able to claim it back as I didn't immediately get another job.

Not often I will defend RM, but HMRC have caused this. Anyone working there saying otherwise either wasn't there when the change came in, or have caught Simon Thompson's bullshit disease.

[short bloke]

It may not be emergency taxes and maybe just the higher rate tax. the point I am making is the member wouldn't have to do this if only the Manager prepared properly and followed the process.

[Maycov]

If you paid £1800 in tax (not including NI) on £3800 it cannot be correct as the highest rate of PAYE tax is 45% which is £1710. If P45 has been issued they should have used code 0T week 1 or month 1. If weekly paid the tax tables assume you will earn £3800 each week which would be £197,600 per year. You would get 1/52nd of the 20% and 40% tax band with the rest taxable at 45%.

https://www.gov.uk/employee-leaving

[Maycov]

Depending on what you are doing now you may be able to claim a refund from HMRC

https://www.gov.uk/government/publicati ... orking-p50