Armed forces redundancy/Tax credits.

[odydog]

My husband has been made redundant from the Armed Forces. His payment for redundancy was above 30K,this was all TAX FREE!!! Can anyone tell me how much of this should be declared to tax credits,if any of it should be? This was a tax free lump some,no pensions etc until 65. We are currently not claiming any benefits and are living off this money.

[BRIGADIER2JCS]

Hi, you would need to contact HMRC to get the exact answer to this every case is different, your local tax office should be able to get a difinitive answer for you.

 

I have recommended the course to others in this situation with good results.

[honeybee13]

Hello there.

 

Have they given you a breakdown of how the figure is made up please? There may be a reason that over £30k is tax-free. I'm not sure if that is your query though.

 

If your question is only about tax credits, I may move your thread to the HMRC forum.

 

My best, HB

[Nystagmite]

Someone in the Armed Forces forum may know.

[odydog]

It just says Special Capital Payment! Thanks for help so far.

[BRIGADIER2JCS]

The tax office is the best way to get the definitive answer every case in these redundancies is different.

[odydog]

Just spoke to the Tax office, he said not to take his word for it but he thinks its Taxable income they take into account. Why is it, you contact the people who should know and they dont. I was told by Tax credits to just "Put it on annual declaration". Seems daft that nobody knows.

[BRIGADIER2JCS]

Hi odydog I've just had a word with a colleague at the garrison here the tax office have given you the correct information it is best to declare all finacial assets then you cannot be held responsible for with holding the information at a later date.

[odydog]

Thanks for that information.

[Nystagmite]

Can any of the armed forces charities advise on this?

[estellyn]

With capital and tax credits, you need to declare any interest you get from it above £300 a year.

[odydog]

Can you explain a bit more please?

[Nystagmite]

http://www.hmrc.gov.uk/taxcredits/start/claiming/income-hours/other-income.htm I think this might help you.

[estellyn]

Can you explain a bit more please?

 

The payment received is counted as savings and not income, and therefore does not need to be declared as income for tax credits. What you do need to declare each year is any interest above £300 you make off of your savings. So you won't have earned interest from it yet, but say next April when you get your annual tax credits declaration, if had earned £365 interest in total from all your savings, then you would declare £65 income from capital for the year on your declaration form. (be aware the £300 earnings from capital will also include things like dividends from shares etc).

[odydog]

Thanks for that. Be good if Tax credits could tell me this.

[estellyn]

Thanks for that. Be good if Tax credits could tell me this.

 

Yep you think they would know their own rules!

[BRIGADIER2JCS]

The biggest problem is these unnecessary redunancies antd the consequences of them have not been properly thought out MOD as usual foul up.

[stu007]

Hi.

 

Your best option to clear this matter up for you is either speak with the Royal British Legion or better still

 

contact the Armed Forces Paymaster as they will be able to clear that up for you as they deal with HMRC.

 

I am not 100% positive on this but as this is a tax free lump sum i am sure they cant touch it but you really need to clarify this by contacting the Armed forces paymaster.

 

This is their link: www.xafinity.com/.../Xafinity-Paymaster/Contact/.../Armed-Forces.as...

 

If you receive an Armed Forces pension from Xafinity Paymaster you can telephone us on 0845 1212 514 or e-mail a general enquiry to:

 

 

• [email protected] (note - remove the space in paymaster for the link to work)
  

Armed Forces Redundancy Scheme 2010(AFRS 10)

• This scheme is for the members of the Armed Forces Pension Scheme 1975 (AFPS 75).
  
• Special Capital Payment (SCP) - A tax-free lump sum that is only available to AFRS10 participants and is paid in addition to AFPS 75 benefits.
  

Edited February 25, 2013 by stu007

[odydog]

Thank you so much stu007. Very helpful links.

[Old Cogger]

or contact SSAFA they may help/advise.

[odydog]

I have just emailed a contact at AFF,hopefully they will be able to shed some light. Not only that,they may be able to do an article in the magazine for families in the forces. Thanks guys.