DWP HQ Leeds branch moved motion A546 at the ADC today and in it exposed a tax issue for persons receiving redundancy payments since April 2011.In a sneaky move the ConDems changed the tax treatment of payments made to an employee through PAYE after they have left employment w.e.f. 6 April 2011. These changes also encompass arrears of pay, unpaid holiday pay and redundancy and termination payments.
Essentially the payment will be initially taxed at basic rate up to threshold (£2917pm /£674pw). Any excess will be taxed at the higher rate of 40% up to threshold (£12,000pm / £2,885pw) and the AR of 50% thereafter.
Conference believes this will place an obligation upon the individual to claim the overpaid tax, and it means the Exchequer gets the money and earns interest on it rather than the individual.
Conference supported the motion calling for negotiators to seek a change to the rules.
We will provide further information as and when it becomes available. In the meantime we alert any members who have applied for VERS to carefully check with their tax office what their liability will be.
