Redundancy and Lump sum pension

2014-15 40% kick in at £41865, you forgot £10k personal allowance.

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2014-15/tax-and-tax-credit-rates-and-thresholds-for-2014-15

If planning to not work or claim JSA look at a P50.

http://www.hmrc.gov.uk/pdfs/p50.pdf


You need to get full information on the options taking the larger lump sum is very rarely the right thing to do even if you think you need the money.

Taking the larger lump sum could cost you £1000s unless there are life impairment issues that can make taking the money now the right option.

You need to know the commutation rate and the options the benefits off topping up the pension with a lump sum etc.

It is often better to borrow the money and use the extra pension to pay it off having the pension for the longer term.

£41k salary and 37 years service, £8500 looks very low for a final salary, check the index linking and spouse options.

His total for the year should be under the 40% limit and there is no NI on the pension.

Forgot the pension so a P50 may not be possible but any extra tax on the redundancy payment will cut the tax on the pension.

binnie wrote: »

So are you meaning he can earn £41,000 ish for the tax year because you deduct the personal allowance of £10,000 taking it down to £31,000?

The personal allowance is the first £10,000 earnings which is taxed at 0%
(this can get adjusted for tax related benefits like cars or health insurance and pension contributions)

Then there is the 20% band for the next £31865 of earnings.

If he has an annual salary of £41k he should already know he does not get taxed at 40%.

I am surprised you seem to be worrying about a few £100 of 40% tax when you are prepared to throw away potentially £1000s with the pension.

binnie wrote: »

We are buying a property in Spain

My advice is don't! Buying property in Spain is often problematic, is a very poor investment and you will be unlikely to be able to sell it if you decide that the grass isn't greener and want to return to the UK.


Move to Spain by all means. Get away from the tourist areas and the ex-pat enclaves and it is a fantastic place to live. But rent for the first few years while you get your feet under the table. Rents in Spain are far cheaper than here and if you still want to buy after a few years you will at least have a better understanding of what you are getting into.