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HomeHomeSupportSupportPayment and Ded...Payment and Ded...Redendancy Severance PaymentRedendancy Severance Payment
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30/11/2011 09:29
 
AnneMacInnes
No Ranking

Joined: 28/05/2009
Posts: 1
I have come to a compromise agreement with an employee. Her last monthly pay was last Friday but we have made a redundancy severance payment of 10K that is non-taxable and I wanted to generate a code for that by running it in this month's payroll ( in which she is due nothing before generating a P45. However having set up a code that is non-taxable, the software is saying she is due a tax refund of £36.20. Why is that happening and how can I stop that?
 
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30/11/2011 09:35
 
12Pay Support
2nd Level Poster

Joined: 13/02/2007
Posts: 1336

They're getting the tax refund because they're entitled to it if you pay them zero in the current month, due to an additional month's tax free pay on their tax code.

Since the redundancy payment doesn't affect PAYE/NI at all, and isn't reportable to HMRC through P35/P14 or P45 a better approach might be to not put the redundancy payment through the payroll at all. If you want to do this then (a) remove the redundancy payment and (b) Do NOT click the employee's "Calculate" button. That will remove the employee from the current pay run. Pay the redundancy separately, it doesn't particularly belong on a payslip.

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