Can I seek a clarification on this? I have a very similar U.K. company share scheme, where vested stocks have tax deducted and then sit in a company operated ‘Share Plan Account’. These shares are then free of restrictions and can be held or sold. We are given the choice to either have dividends automatically reinvested by the company to buy more shares or to take the dividends in cash. Either option can be chosen and changed at any time. Do I I understand correctly that this means these dividends will be liable for income tax (dividend tax) regardless of whether I select the reinvestment or cash option?
If I take the excess redundancy figure away from the total pay figure on the employment page, then that total figure does not match the P45. As a result, the system provides a red ‘warning’ that my income amount is not correct.
That is why I called the HMRC helpline for advice, and I was clearly told by a tax advisor that if all redundancy payments (except the first 30k) are already included in the P45, then they do not need to be included elsewhere in the return.
To be clear, in both approaches the tax calculation is that same. The difference is that when I reduce the total pay figure by the amount of the excess redundancy and include this amount in the lump sum section, I get a persistent warning that my total employment entry is incorrect (presumably because it doesn’t match the P45 and/or because the tax looks too high for the income).
Give all of the above I don’t understand why the excess redundancy should be removed from the total pay figure: it creates an error in the return that has to be investigated/explained and makes no difference to the tax calculation.
Update: due the conflicting advice I was receiving, I called the HMRC helpline and received advice from a technical advisor. That advice was not to include lump sums elsewhere on the return if they are already included in the P45 which has been imported directly to the total pay and tax on the employment pages. If this is incorrect please advise.
This advice seems to contradict what I was told earlier in the thread. If the figure on the employment page matches the P45 (which already includes the excess redundancy payment above £30,000) and I also add that same excess redundancy payment in the tailored ‘employment lump sums’ section of the online return, then the tax calculation adds these 2 numbers together to create a higher total income than I received, and an incorrect tax calculation as a result.
If I reduce the income on the employment pages by the amount of the excess redundancy figure and then include this excess redundancy figure on the ‘employment lump sum page’ (ie what was suggested by HMRC Admin 32 earlier in this thread), then the total income on the tax calculation is the same as the P45.
Can you please confirm this is the correct approach?
Thanks. Should I also subtract the £30,000 redundancy payment from the figure on the employment page, or just the amount above the £30,000?
Some hypothetical figures to illustrate:
Pay from this employment: 100. This is taken from P45 and includes:
50 redundancy (of which 30 not taxed)
Tax deducted: 20. (This is not broken down by the same elements as above). This is also the amount on the P45
My issue is if I include any of the redundancy or PILON in another box, the tax calculation treats it as extra income above what is on my P45.
So should I be completing the additional boxes per your previous response and reducing the amounts in ‘total pay from this employment’ by the same amount?
Thanks for your reply. I’m still confused as the total pay and tax on employment pages already include theses amounts (directly imported by HMRC from P45). If I add the redundancy payments again in the additional information without reducing the total pay numbers then surely I’m declaring more income than I received?
My P45 total pay and tax has been automatically imported into my tax return employment pages. This includes salary plus PILON, 30k redundancy (not taxed) and additional redundancy taxed. Do I need to complete the employment lump sum pages if the correct total pay and tax figures are already included in employment totals? If this is required, I can manually deduct the gross pay amounts to avoid double counting income, but I can’t do the same for tax as this is not itemised separately for each category of payment.
Alternatively if I’m satisfied the total numbers which have been automatically filled in the employment pages are correct, can I just ignore the lump sums section?