Tax on redundancy payment.

buylessthings

I am being made redundant in early March, and my employer initially agreed to pay me my redundancy in April (new tax year) which will allow me to pay tax on (the taxable part) at 20%.

They are now saying they cannot due this due to tax rules, and will pay me in March, which will mean I will be taxed (on the taxable part) at 40% - because my redundancy will accumulate with my salary so far this year.

This means I will lose quite a few thousand pounds more in tax, just because I am getting the money three or four weeks earlier.

Is there any way around this? Does anyone have any experience of getting a redundancy payment delayed into the next tax year?

Thanks

artha

buylessthings wrote: »

I am being made redundant in early March, and my employer initially agreed to pay me my redundancy in April (new tax year) which will allow me to pay tax on (the taxable part) at 20%.

They are now saying they cannot due this due to tax rules, and will pay me in March, which will mean I will be taxed (on the taxable part) at 40% - because my redundancy will accumulate with my salary so far this year.

This means I will lose quite a few thousand pounds more in tax, just because I am getting the money three or four weeks earlier.

Is there any way around this? Does anyone have any experience of getting a redundancy payment delayed into the next tax year?

Thanks

I'm not aware that it can be delayed. One other option to reduce tax may be to buy some extra pension from the fund with the money that will be taxed at 40%. Depends if your scheme allows it and what its costs

jimmo

This earlier thread may be helpful. http://forums.moneysavingexpert.com/showthread.html?t=1370361

buylessthings

Thanks for your responses, and the link to the other thread. I will have a read through that one.

I don't have any holiday owing, but I am going to try and get my notice period adjusted, so that my finishing date is in April. I don't know if they will do it, but it's worth a try.