Garden leave or PILoN? and National Insurance calculations

Laws777

Hi all, I wonder if someone can help me. My husband has been made redundant this week and we have to make some decisions...

He will recieve £45,698.12 in redundancy pay (so will be taxed 40% on £15,698.12 of this)

He can defer this and take 3 months garden leave (ending 29th May 09) with a monthly take home of £4565.10 (based on previous monthly wage)

OR

Take Pay In Lieu of Notice, of £20,919 (40% tax to pay + National Insurance)

2 people have mentioned to him to consider the fact that if he takes Garden Leave, the redundancy payment will take him into a new Tax Year. What happens in this case - does this alter the amount of tax he pays on the redundancy?

Also, how much National Insurance will he pay on the Pay in Lieu?

Thank you in advance for any help you can give. Figures spinning round my head!!

sammyjammy

If the redundancy payment falls into the next tax year and he doesn't work in that year or only earns enough to be in the lower tax bracket then he will pay less tax on the £15k over £30k.

I think the NI on PILON is the same as usual so 11% for an employee

Laws777

Thank you SammyJammy... but what if he does work (and hopefully he will!) and earns over the lower tax rate bracet... (£37,400 I think) - is the redundancy pay calculated at 20% and the rest of his years earnings calculated at 40% or will we have to 'pay back' the tax he should have paid on the redundancy???

Thanks for the % figure for national insurance, couldn't find that anywhere!