redundancy tax

Nesty

Hi All

I am considering taking my Redundancy payment this month.I got until Feb to work, though the Government are planning to change my terms.

If my redundancy payment take me just into the higher tax bracket. Does this mean that if I get another job in this tax year I'll be paying 40% on future earnings?

Also does my personal allowlance get taken into account on my redundancy payment or is it just future earnings of another job later in the year?

LittleVoice

How much is your redundancy pay in total?

This is May, so do you mean you can work until February 2010 and leave at any time between now and then?

Nesty

Above £40k as along as it doesn't get revoked. yes I can work till Feb & leave anytime betwen now and then

Money_Grabber13579

The first 30k of statutory redundancy pay is usually tax free. Above this, and it will be taxed as income.

benood

The first 30k of non contractual redundancy is tax free, doesn't have to be the statutory variety.

LittleVoice

Do you want to take a "gap year" (of whatever length)? If not, why not wait and find another job and then resign and take the redundancy (unless you are fearful that the terms could change and you would miss out on a redundancy payment.

IIRC, decades ago the Civil Service had the Crombie Code which dealt with this type of situation and staff were able to leave and collect redundancy payments fairly flexibly but with an ultimate termination date.

Nesty

A lot of staff already taking the payment this week. Mainly as we just don;t know what the Government are gonna annouch in a few weeks time with the Compinsation scheme.

The only thing stopping me going this week is that i don't want to eat into the redandancy payment by lack of wages coming in

fengirl_2

To answer your question, if your redundancy pay is not a contractual right, £10,000 of it will be taxable. The higher rate tax limit is £37,400 for 09/10, which measn that once your income for the year reaches £43,875 you will pay 40% tax on the excess.