I have a client who worked up to 31st October as an employee and then became Self-Employed.
His final wage slip from his employee shows the following:-
Redundancy Pay 4304.76 Earnings to Date 18,440.07
Taxable Pay to Date 14,135.31
Tax to Date
Am I right in presuming his Redundancy pay is non-taxable. ie. I put the figure of £14,135.31 in his Employed Earnings? Where on the SA Form do I record the £ 4,304.76?
From November to April he earned £ 22,413, of which £ 2,805 was taken off him in tax. How/ where do I account for the £ 2,805 on the SA Form.?
I think you need more info. Whether redundancy pay is taxable or not depends on whether it is ex gratia or not. On the assumption that its not then no. If the individual was entitled to the payment in his contract then it would be.
was your clients work during Nov-April as a subcontractor under the CIS Scheme? Standard deductions would be 20%
Which would be £22413 * 20% = £4482.60 so it is likely there are also £8K deductions or expenses. Account for any such in his accounts and these are entered on self employment supplementary pages.
Redundancy pay is not usually taxable up to £30K and you appear to have it in black and white that £4304 is, in fact tax free. It is not, therefore entered on a tax return.
