Tax Year End
December 23rd, 2010
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Tax Year End
Question: PAYE was deducted from my redundancy payment on 31st Dec 2007. Can I claim back before end of this tax year?
I am now no longer employed. Redundancy payment takes me well into the 40% bracket. Surely the tax is not due until the end of the tax year and I should be able to get a refund that I can put into a bank to earn some interest on rather than letting the tax man use my money for free.
Answer: The first £30k of redundancy pay is tax free. After that, it is taxed as normal. Your ex-employer was obliged to deduct tax according to the tax tables provided by the government. If you have paid too much tax, you can claim back the excess. If you earn any more between now and the end of the tax year (either pay or interest on savings) it will affect your tax liability so it is much easier to sort out after the end of the tax year. If there is a lot of overpaid tax, it is worth talking to HM Revenue & Customs about an interim refund – I have found them perfectly reasonable.
Tax Tips: Year-End Tax Tips December 2009
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