Can redundancy payment be invested into company pension?

Venice1

Hi...I understand that the first £30k of a redundancy payment is tax free, but understood that the remainder of a payment can be re-invested into the company pension to avoid paying 40% tax on it. My company now says the Govt have stopped this happening. I'd apprec any advice please, as if being made redundant, this money is needed to pay mortgage, bills, living expenses....etc.
Look forward to hearing any advice............

1984ReturnsForReal_2

Venice1 wrote: »

Hi...I understand that the first £30k of a redundancy payment is tax free, but understood that the remainder of a payment can be re-invested into the company pension to avoid paying 40% tax on it. My company now says the Govt have stopped this happening. I'd apprec any advice please, as if being made redundant, this money is needed to pay mortgage, bills, living expenses....etc.
Look forward to hearing any advice............

Is it?

Are you sure?

All of it?

Why do you think you will pay 40% tax on it?

Its not a capital gain is it?



My best advice is speak to an accountant. I think you may have the wrong end of the stick on some things, or may be I have....

getmore4less

Anything over £30k is taxed at the marginal rate,

So you still get the rest of the 20% band if you have not used it all yet, so over 40k before the 40 kicks in.

You can always stick it in a personal pension.

1984ReturnsForReal_2

getmore4less wrote: »

Anything over £30k is taxed at the marginal rate,

So you still get the rest of the 20% band if you have not used it all yet, so over 40k before the 40 kicks in.

You can always stick it in a personal pension.

Cheers.

I was just about to put a link to it on the Cutting Tax forum.

Its probably better there.

Andy_L

Venice1 wrote: »

but understood that the remainder of a payment can be re-invested into the company pension to avoid paying 40% tax on it.

Depends on the company scheme rules as to whether you can pay your redundancy into the scheme or not. As getmore4less says if its not allowed you could pay it into a personal pension instead

Venice1

Hi and thanks for your replies. The person poss being made redundant is a 40% tax payer.

Rgds V.

getmore4less

Venice1 wrote: »

Hi and thanks for your replies. The person poss being made redundant is a 40% tax payer.

Rgds V.

But there is only 3 months of the tax year gone, so unless they are on £160k+ they will not have used all the 20% band yet.

Depending on earnings for the rest of the year, any surpluss over £30k allthough maybe getting taxed at 40% initialy it(some/all) will be reclaimable if the total normal earning for the year remain under the 40% band(£43875).