Redundancy in January - can I get full year's tax credits?

D

digger007

Guest
Similar question but slightly different. and i cant seem to find any info on the revenue or dti sites and my companies HR department are practically useless.

Im currently paying the higher rate of tax. Can I take voluntary redundancy in January 09 and not work for the rest of 2009 and get the full benefit of my tax credits so my taxable pay in 2009 will be just the redundancy payment and therefore at the 20% tax rate. (The lump sum mius tax reliefs minus credits does not reach the amount for the higher tax band). Does top slicing apply in this circumstances?

How does this actually happen, Will my employer take the tax from my lump sum and then I claim back from the revenue throughout the year? Or do i have to wait until the end of 2009 and then do a tax return/Balancing statement?
 
Yes. If the taxable element of the redundancy package is your only taxable income in 2009, you will by the end of the year be able to claim your whole tax credits and standard rate cut-off points against it.

You can start claiming tax relief after 4 months' unemployment so you will get the benefit of one month's tax credits and SRCOP.

The Top Slicing Relief question is an interesting one. You cannot claim Top Slicing Relief until the end of 2009. The tax rate on the redundancy will presumably be 20% by the end of the year. It is likely that your average tax rate over 2006,2007 and 2008 was higher than 20%, so you will not get any Top Slicing Relief.

Brendan
 
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