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Posted Tue, 12 Dec 2023 15:37:24 GMT by
In the tax year April 22 to 23 my employer terminated my employment and as part of that process I was awarded a £75k settlement that was paid one month after my termination date. I understand that £30k of this is non taxable, so the taxable element of the settlement is £45k. If I look at my P45, I see my 'Total pay to date' figure is the sum of everything I was paid minus £30k. My final payslip shows a Total gross of £X, and a 'Taxable pay' figure of £X-£30k. This Taxable pay figure exactly matches the figure on my P45. I then paid tax on that Taxable pay figure at source - i.e. tax was taken at source in the usual way PAYE taxes you at source (on your taxable pay figure). The Self Assessment form has a section titled 'Employment lump sums, compensation and deductions and certain post-employment income', and in there it asks you to record 'Redundancy and other lump sums and compensation payments - the amount above the £30,000 exemption.' In my case this would be £45k. It then asks for 'Tax taken off boxes above', and as I have paid tax on everything at source, I don't have a specific figure for this box - i.e. it is not detailed anywhere on my p45, or my salary advice slip. So I have left this box blank. The next question asks if 'I have left the ''Tax taken off' blank because the tax is included in your Employment pages?'. It gives no explanation of what Employment pages are, but I assume these are the figures I have already entered from my P45 and P60. So I have answered 'Yes' to this. Finally, there is a box titled 'Compensation and lump sums payments up to the £30,000 exemption.', and I understand that I should enter £30k into this box. However, my final calculation looks incorrect, and showing a figure far higher than my 'Total Gross' figure found on my final payslip. My question is do I need to declare this £75k payment at all under 'other UK income' as I think I have already paid tax on this at source. Many thanks.
Posted Tue, 19 Dec 2023 09:30:19 GMT by HMRC Admin 5 Response
Hi

As the settlement is included in your P45 and the tax free lump sum already taken into account, you would only need to declare the P45 figures on SA102 (employment) or the online equivalent.  
The section in the additional information would only be completed where the settlement was not part of your P45 / P60.

Thank you

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