Using Redundancy Payment for Pension

At the end of March I took a voluntary redundancy package from my long time employer. I had a final salary pension scheme with them and due to a number of reasons I decided to start taking my DB pension immediately (I'm 59). But of course I got hit by tax on the redundancy payment above £30k at 40%. Could I now start a private pension plan and invest some of the redundancy payment in it, and get the full tax relief on the contributions? One added complication is that although I left the company on 31 March, the redundancy payment wasn't made until May and the company marked the payment in this tax year. Does that mean I can class this as "earned income" in this tax year and then could even put all of it (above the £30k tax-free amount) in to my new personal pension? I wasn't sure if HMRC would consider the redundancy payment as being for last tax year or this tax year, since my leaving date was 31.March but the payment was in May.

The final point is that although I'm taking my occupational (DB) pension (and took a tax-free lump sum from it), I understand this doesn't trigger the MPAA which would restrict any tax relief on pension contributions this year, because it's not a money purchase scheme. Can anyone confirm that?

Thanks. I'd appreciate any help with this.

Comments

  • cloud_dog
    cloud_dog Posts: 6,041 Forumite
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    I'm not a regular on this board but I think you may get confirmation if you post on the Pensions board. A similar question was raised on there quite recently.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • ok thanks. I'm not sure I can move it but I'll post on the pensions forum as well.
    New to this. :-)
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