Redundancy Tax Free Threshold 2011
Redundancy Tax Free Threshold 2011
Your redundancy payment
Your employer may make a redundancy payment to you to compensate for ending your employment. This may be part of a redundancy package, which can include payments made for reasons other than your redundancy. The table below shows some examples of these payments and when tax and NICs
are payable.
Payment: Redundancy payment
Do I pay tax? Only on the amount above £30,000
Do I pay National Insurance? No
Payment: Unpaid wages
Do I pay tax? Yes
Do I pay National Insurance? Yes
Payment: Bonus payment
Do I pay tax? Yes
Do I pay National Insurance? Yes
Payment: Occupational pension
Do I pay tax? Yes
Do I pay National Insurance? No
Your employers will deduct tax and NICs using the guidance HMRC provide. They should also give you a form P45 Details of employee leaving work when you leave.
Items other than money
Anything else you receive which is not money is converted into a cash value for tax and NICs purposes. If these items were given to compensate for your redundancy, the cash value counts toward the £30,000 tax–free limit.
Contact your employer or HMRC if you want more information about tax and NICs on your redundancy payment or the payments included in your redundancy package.
If you think you have paid too much tax, you should contact your tax office to claim a refund. They will tell you what information to provide and if there are any forms you need to complete.
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Redundancy Tax Free Limits
Redundancy Tax Free Limits
If you are being made redundant it is worth knowing how much redundancy will be tax free.
From the 6th of April 2011 the Government introduced a new 50% redundancy tax will affect all redundancy payments over £30,000.
The tax free amount of a redundancy payment remains £30,000 but anything above this tax free threshold will be deemed to be a monthly payment and increase your monthly earnings. The 50% tax rate will only be applicable if the redundant person is within the higher tax threshold.A redundancy payment of greater than £42,500 will bring an individual into the 50% tax bracket.
Also it is worth remembering that if the person’s redundancy payment crosses the higher tax threshold, all their income from other sources such as their savings, shares, second job wages or rental income may be taxed at the higher tax rate.
The key limit here is £30,000. If you are getting this or less then you will pay no tax upon it.
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New HMRC blunder: Writes to 4.7m people to correct tax mistakes
Her Majesty’s Revenue and Customs (HMRC) will write to 4.7 million taxpayers later this year to tell them they have over or underpaid their income tax for 2010/11.
HMRC said the letters will follow its annual round of checks to ensure the correct tax has been paid, the BBC reports.
The Revenue estimates between 1.7 and 3.5 million people will receive a rebate of on average £340, but 1.2 million will find they still owe an average of £500.
An HMRC spokesperson said the Revenue’s computer system is now working well and is much faster and more accurate than previous systems.
HMRC faced public embarrassment in September last year when, due to computer errors, it announced 5.7 million people had not paid the correct tax in 2008/09 and 2009/10.
The result was a clawback of an average of £1,428 from 1.4 million people, whilst 900,000 taxpayers had their tax bill of up to £300 written off.
The Revenue has been plagued by a series of blunders in recent months. In January this year, it emerged HRMC had failed to match the National Insurance payments to 9.3 million workers’ records.
Read more: http://www.ifaonline.co.uk/ifaonline/news/2082420/hmrc-blunder-writes-47m-people-correct-tax-mistakes?WT.rss_f=Tax+planning+-+Investment&WT.rss_a=New+HMRC+blunder%3A+Writes+to+4.7m+people+to+correct+tax+mistakes#ixzz1QlhBsqUa
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Categories: Tax Articles Tags: income tax
Mother jailed after claiming for nine fictitious children
A mother of six has been jailed for fraudulently claiming tax credits for nine fictitious children following an investigation by HM Revenue & Customs (HMRC).
Kerry Melia, of Tipton in the West Midlands, swindled £62,243 after adding three fictitious children to her tax credit claims in January 2007, saying they were her foster children.
The 30-year-old then tried to add another six non-existent children. When HMRC officers searched her house for evidence of fraud, they discovered exotic pets including a number of cockatiels, terrapins and a large snake, as well as dead mice in the freezer to feed it.
Having already admitted to tax credits fraud at a previous hearing, Melia was sentenced to eight months in prison at Wolverhampton Crown Court today.
David Gauke, exchequer secretary to the Treasury, said: “The Government will not tolerate dishonest people stealing public money which pays for vital services. This sentence shows that those who think they can cheat the benefits system should think again.
“The extra £900m we have invested in HMRC will allow them to carry on the fight against benefit cheats and tax fraudsters.”
Melia first claimed tax credits for her five real children in 2005 and she had a sixth child after being charged with fraud.
Read more: http://www.ifaonline.co.uk/ifaonline/news/2082745/mother-jailed-claiming-fictitious-children?WT.rss_f=Tax+planning+-+Investment&WT.rss_a=Mother+jailed+after+claiming+for+nine+fictitious+children++#ixzz1QlhkvUdZ
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Categories: Tax Articles Tags: David Gauke, hmrc, Kerry Melia, Wolverhampton Crown Court
Treasury to tighten UK residence tax rules
The Treasury is proposing to strictly define who is an ordinary British resident for tax purposes, as part of reforms announced in the Budget.
The government’s proposed definition is that individuals who spend time in the UK should be treated as ‘ordinarily resident’ for tax purposes unless they have been non-resident in the UK in all of the previous five tax years.
Individuals should only be able to access ordinary resident tax status in the tax year in which they arrive in the UK, and for a maximum of two full tax years following the year of arrival.
Under current rules, individuals are treated as ordinarily resident if they usually live in the UK (or intend to do so), or come to the country regularly and for 91 days or more per tax year.
Ordinary residence cases have become increasingly prone to legal wrangling over tax status and the government wants to tighten the rules to avoid more litigation, the paper states.
The high profile and long-running case of Robert Gaines-Cooper, the Seychelles-based UK multi-millionaire, is one such legal battle ongoing with HMRC.
Ordinary residence is relevant to an individual’s UK tax liability in two main ways. Individuals who are not ordinarily resident in the UK can claim the remittance basis of taxation for foreign investment income. This offers beneficial treatment as they are only liable to UK tax on their foreign investment income if it is remitted to the UK.
In addition, certain tax liabilities such as capital gains tax, can apply if a person is not resident in the UK but is ordinarily resident.
In 2008-09, approximately 29,800 individuals indicated on their Self Assessment (SA) tax return that they were resident but not ‘ordinarily resident’ in the UK. Of these 23,100 were also non-domiciled, and 6,700 were domiciled in the UK.
Of the 6,700 domiciled and not ordinarily resident individuals, approximately 300 claimed the remittance basis.
Read more: http://www.ifaonline.co.uk/ifaonline/news/2079812/treasury-tighten-uk-residence-tax-rules?WT.rss_f=Tax+planning+-+Investment&WT.rss_a=Treasury+to+tighten+UK+residence+tax+rules+#ixzz1QliDr5SX
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Categories: Tax Articles Tags: UK
Baker Tilly offers ‘guarded welcome’ to residency tax test
psmall !– link — a href=http://www.ifaonline.co.uk/ifaonline/a !– end-link — /small/p p!– subheading — !– end-subheading — !– summary — The Treasury’s proposed statutory residency test is a welcome improvement to the current “chaos” but it may still provide room for fraud, accountants Baker Tilly has said. !– end-summary — /pimg width=’1′ height=’1′ src=’http://feeds.ifaonline.co.uk/c/32410/f/588128/s/15f740af/mf.gif’ border=’0′/div class=’mf-viral’table border=’0′trtd valign=’middle’a href=”http://res.feedsportal.com/viral/sendemail2.html?title=Baker+Tilly+offers+%27guarded+welcome%27+to+residency+tax+testlink=http%3A%2F%2Fwww.ifaonline.co.uk%2Fifaonline%2Fnews%2F2079860%2Fbaker-tilly-offers-guarded-welcome-residency-test%3FWT.rss_f%3DTax%2Bplanning%2B-%2BInvestment%26WT.rss_a%3DBaker%2BTilly%2Boffers%2B%2527guarded%2Bwelcome%2527%2Bto%2Bresidency%2Btax%2Btest” target=”_blank”img src=”http://res3.feedsportal.com/images/emailthis2.gif” border=”0″ //a/tdtd valign=’middle’a href=”http://res.feedsportal.com/viral/bookmark.cfm?title=Baker+Tilly+offers+%27guarded+welcome%27+to+residency+tax+testlink=http%3A%2F%2Fwww.ifaonline.co.uk%2Fifaonline%2Fnews%2F2079860%2Fbaker-tilly-offers-guarded-welcome-residency-test%3FWT.rss_f%3DTax%2Bplanning%2B-%2BInvestment%26WT.rss_a%3DBaker%2BTilly%2Boffers%2B%2527guarded%2Bwelcome%2527%2Bto%2Bresidency%2Btax%2Btest” target=”_blank”img src=”http://res3.feedsportal.com/images/bookmark.gif” border=”0″ //a/td/tr/table/div
Categories: Tax Articles Tags: Baker Tilly
Lib Dems resurrect mansion supertax
psmall !– link — a href=http://www.ifaonline.co.uk/ifaonline/a !– end-link — /small/p p!– subheading — !– end-subheading — !– summary — The Liberal Democrats are demanding a ‘supertax’ on thousands of homes as the price of agreeing to scrap the 50p top rate of income tax. !– end-summary — /pimg width=’1′ height=’1′ src=’http://feeds.ifaonline.co.uk/c/32410/f/588128/s/16255c11/mf.gif’ border=’0′/div class=’mf-viral’table border=’0′trtd valign=’middle’a href=”http://res.feedsportal.com/viral/sendemail2.html?title=Lib+Dems+resurrect+mansion+supertaxlink=http%3A%2F%2Fwww.ifaonline.co.uk%2Fifaonline%2Fnews%2F2081411%2Flib-dems-resurrect-mansion-supertax%3FWT.rss_f%3DTax%2Bplanning%2B-%2BInvestment%26WT.rss_a%3DLib%2BDems%2Bresurrect%2Bmansion%2Bsupertax” target=”_blank”img src=”http://res3.feedsportal.com/images/emailthis2.gif” border=”0″ //a/tdtd valign=’middle’a href=”http://res.feedsportal.com/viral/bookmark.cfm?title=Lib+Dems+resurrect+mansion+supertaxlink=http%3A%2F%2Fwww.ifaonline.co.uk%2Fifaonline%2Fnews%2F2081411%2Flib-dems-resurrect-mansion-supertax%3FWT.rss_f%3DTax%2Bplanning%2B-%2BInvestment%26WT.rss_a%3DLib%2BDems%2Bresurrect%2Bmansion%2Bsupertax” target=”_blank”img src=”http://res3.feedsportal.com/images/bookmark.gif” border=”0″ //a/td/tr/table/div
Categories: Tax Articles Tags: income tax, Lib Dems
Time to cut married couples’ tax bills: MPs
A possible amendment to the Finance Bill could allow married couples to share their tax free allowances to help cut their tax bill.
The amendment, tabled by conservative MP for Congleton Fiona Bruce, would allow unemployed spouses to give their working spouse their unused personal allowance, the Telegraph reports.
Ten MPs have backed the amendment so far, putting pressure on David Cameron to keep to the Conservative manifesto pledge to “recognise marriage and civil partnerships in the tax system”.
The Conservatives previously asserted Labour’s tax system “rewarded couples who split up”.
However, Liberal Democrats who said their policy of raising the tax free threshold to £10,000 is more important have threatened to oppose the amendment.
Read more: http://www.ifaonline.co.uk/ifaonline/news/2082063/cut-married-couples-tax-bills-mps?WT.rss_f=Tax+planning+-+Investment&WT.rss_a=Time+to+cut+married+couples%27+tax+bills%3A+MPs#ixzz1Qll7AGe5
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Categories: Tax Articles Tags: Finance Bill
HMRC targets VAT evasion with robots
psmall !– link — a href=http://www.ifaonline.co.uk/ifaonline/a !– end-link — /small/p p!– subheading — !– end-subheading — !– summary — Her Majesty’s Revenue and Customs (HMRC) will use web-robots to catch businesses which earn more than £73,000 per year but have not registered for VAT. !– end-summary — /pimg width=’1′ height=’1′ src=’http://feeds.ifaonline.co.uk/c/32410/f/588128/s/15db58f3/mf.gif’ border=’0′/div class=’mf-viral’table border=’0′trtd valign=’middle’a href=”http://res.feedsportal.com/viral/sendemail2.html?title=HMRC+targets+VAT+evasion+with+robotslink=http%3A%2F%2Fwww.ifaonline.co.uk%2Fifaonline%2Fnews%2F2078503%2Fhmrc-targets-evasion-fraud-robots%3FWT.rss_f%3DTax%2Bplanning%2B-%2BInvestment%26WT.rss_a%3DHMRC%2Btargets%2BVAT%2Bevasion%2Bwith%2Brobots” target=”_blank”img src=”http://res3.feedsportal.com/images/emailthis2.gif” border=”0″ //a/tdtd valign=’middle’a href=”http://res.feedsportal.com/viral/bookmark.cfm?title=HMRC+targets+VAT+evasion+with+robotslink=http%3A%2F%2Fwww.ifaonline.co.uk%2Fifaonline%2Fnews%2F2078503%2Fhmrc-targets-evasion-fraud-robots%3FWT.rss_f%3DTax%2Bplanning%2B-%2BInvestment%26WT.rss_a%3DHMRC%2Btargets%2BVAT%2Bevasion%2Bwith%2Brobots” target=”_blank”img src=”http://res3.feedsportal.com/images/bookmark.gif” border=”0″ //a/td/tr/table/div
Categories: Tax Articles Tags: hmrc, VAT
VAT guidelines to define ‘pure’ advice
psmall !– link — a href=http://www.ifaonline.co.uk/ifaonline/a !– end-link — /small/p p!– subheading — !– end-subheading — !– summary — HMRC guidance set to be issued next year on the VAT liability of adviser charging will clarify what the taxman considers ‘pure’ advice. !– end-summary — /pimg width=’1′ height=’1′ src=’http://feeds.ifaonline.co.uk/c/32410/f/588128/s/15f5e66d/mf.gif’ border=’0′/div class=’mf-viral’table border=’0′trtd valign=’middle’a href=”http://res.feedsportal.com/viral/sendemail2.html?title=VAT+guidelines+to+define+%27pure%27+advicelink=http%3A%2F%2Fwww.ifaonline.co.uk%2Fifaonline%2Fnews%2F2079656%2Fvat-guidelines-define-pure-advice%3FWT.rss_f%3DTax%2Bplanning%2B-%2BInvestment%26WT.rss_a%3DVAT%2Bguidelines%2Bto%2Bdefine%2B%2527pure%2527%2Badvice” target=”_blank”img src=”http://res3.feedsportal.com/images/emailthis2.gif” border=”0″ //a/tdtd valign=’middle’a href=”http://res.feedsportal.com/viral/bookmark.cfm?title=VAT+guidelines+to+define+%27pure%27+advicelink=http%3A%2F%2Fwww.ifaonline.co.uk%2Fifaonline%2Fnews%2F2079656%2Fvat-guidelines-define-pure-advice%3FWT.rss_f%3DTax%2Bplanning%2B-%2BInvestment%26WT.rss_a%3DVAT%2Bguidelines%2Bto%2Bdefine%2B%2527pure%2527%2Badvice” target=”_blank”img src=”http://res3.feedsportal.com/images/bookmark.gif” border=”0″ //a/td/tr/table/div
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