Tax question

Diagro

Diagro

Diagro

Soldato
Joined
3 Jun 2012
Posts
11,115
Hi all,

Quick Tax question for you all.

I finished working for a place on the 31st May.

The paid me three months wages (my notice period) in a lump sum as an agreed termination type deal.

This has then been taxed as if it was my normal monthly wage which is around £1600 too much tax paid if I compare it to my normal wage slips for 3 months paid monthly.

It's not just tax though, is Tax, NI and student loan.

Can I claw back this over payment in tax? If so, how do I go about doing it?
I've been told to wait till April, and it will all work out, but I don't really want to wait till April... I would like what I'm owed now...

Thanks
 
I'm not going to pretend to know the answer .... but surely whether its an overpayment depends on what happens next. If you remain jobless until the end of the tax year, then yes its likely you have overpaid. If you walk into another job tomorrow paying a similar salary then I suspect not an overpayment at all. Also, were there any taxable benefits involved (private heath care, car allowance, etc).
 
peterwalkley said:
I'm not going to pretend to know the answer .... but surely whether its an overpayment depends on what happens next. If you remain jobless until the end of the tax year, then yes its likely you have overpaid. If you walk into another job tomorrow paying a similar salary then I suspect not an overpayment at all. Also, were there any taxable benefits involved (private heath care, car allowance, etc).
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I won't be employed till Sept 1st.

So no more income till then
 
Depends if you can wait for it to sort itself out over the rest of the tax year. If not, you would need call HMRC to get them to refund you the incorrect amount I believe.
 
Diagro said:
Not quite.
34k annual.

But that month, I got approx 7.8k paid pre tax which is well above the 40% threshold (if they assume I get paid that every month)
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Did you pay approx. £2050 tax and 480 NI?

**apols incorrect calc
 
Diagro said:
Probably, but I don't want to wait till April lol.
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Assuming you give your new job a copy of your P45 and HMRC doesn't put you on a M1/W1 tax code you'll effectively receive the refund whilst working in your new job in the form of paying less tax for the first month/months.

Or use the link provided by Kenai.
 
Diagro said:
Well yea, as I don't earn enough to even reduce it by £300 per year due to interest. And it's 32k... so, never being pad back
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It's a joke isn't it, I'm a "mature" student studying at OU but my fees will "only" be 12k. Even at the standard rate I think I'll be paying something like 70 quid a month. I must be one of the few people that will actually pay it back:cry:.
 
It will work itself out when you start your new job. Otherwise, yes you'll need to wait until April. HMRC won't do an in year refund. NI is taxed on a payment basis rather than full year (like income tax) so you won't get a refund on that. Same for student loan. If anything, you'll be paying less NI because it will be taxed at 2% rather than 12%.
 
Definitely won't be 2% NI going forward. A one off 7.8k payment isn't even remotely close to hititng the limit for that (which is ~50k p.a). They'll probably have charged 2% NI on the value between ~4k and 7.8k since it's often calculated that way on PAYE. Arguably that will lead to an NI under payment by the end of the tax year unless the next employment comes with a higher salary
 
DarkBahamut said:
Definitely won't be 2% NI going forward. A one off 7.8k payment isn't even remotely close to hititng the limit for that (which is ~50k p.a). They'll probably have charged 2% NI on the value between ~4k and 7.8k since it's often calculated that way on PAYE. Arguably that will lead to an NI under payment by the end of the tax year unless the next employment comes with a higher salary
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The one off payment that goes above the upper earnings limit will be taxed at 2%. Based on OP's normal annual salary they would be fully within the 12% if he had been paid over three months instead of as a one off payment, hence the 10% saving.
 
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