relocation and affect on income tax

tommy41

Hi all
I need some help. I have been offered a relocation package from my current employer. They have offered to cover the expenses, eg up to 8k. That i fully understand.

However I have also been offered a lump sum, a disruption allowance of c.60k gross. with an annual salary of 38k. What I dont understand is how this affects my tax.

At the moment I earn c.30k and pay tax at the 20% rate. If I accept the lump sum in April, would I use up all the 20% rate via the lump, thereby making my monthly salary taxed at 40% (becasue I would have exceeded the 20% income threshold. Or if I accept in this tax year would I pay a greater percentage of the lump sum at 40% with a new salary in 2010 / 2011 at 20%?

Hope this makes sense to someone as it's about as clear as mud to me !

cheers
Tom

allydowd

"If your employer helps you to move home because of your job, any payments you receive, or any goods or services provided for you, are treated as part of your earnings for tax and NICs purposes. However, the first £8,000 of any help you get from your employer is exempt from tax and NICs as long as certain conditions are met."

Suggest you read this for further details:

http://www.hmrc.gov.uk/guidance/relocation.htm