Being made Redundant in Oct 2009

Vulcans_2

Hi, I am being made redundant in Oct 2009, I will be getting a redundancy package but am not clear what will be taxed ?

I am asking the forum for their assistance in helping me calculate how much tax I will pay on redundancy.

I am a high-earner tax payer(at the moment) and will get a redundancy package of approximately £70,000 (I have worked at my company for 25 years and this is the maximum no of years I can receive in redundancy).

Is my understanding correct ?

£70000 (redundancy payment)
-£30000 (Tax Free)
leaves
£40000 which will have £37,400 taxed @ 20% and £2,600 taxed @ 40%

or will the £40,000 be added to my income earned so far from my current job from April 2009 and the new total income be taxed @ the rates of 20% on the £37,400 and the remainder be taxed @ 40%. ?

getmore4less

Sorry to say it gets added to the income total for the year.

Are you getting paid PILON/holidays on top or is that included in the figure?

there are NI on PILON/Holidays but not on excees redundancy.

Two options to reduce tax are

Get some paid next tax year.
Put it in a pension.