Redundancy Payment and AVC's

tamste

I am likely to become redundant by January 2007. The lump sum redundancy payment is likely to push a significant proportion of it into 40% tax.

Can I make a lump sum pension AVC contributuon from the redundancy settlement that is liable to tax (i.e. that over £30k) to reduce my overall tax liability without the taxman crying "deprication of assets", and if so what is the best way to go about this.

I feel that timing may be an issue as when I receive the settlement I am not likely to be employed as payment is on termination of contract only.

maple41

I did this when I was made redundant 2+ years ago.
It may depend on any rules in your employer's pension fund, but I believe these days, since April this year you can put it into a SIPP rather than an AVC.
Always the disadvantage that you can't get at the money if you should need it - it sometimes takes longer than you think to get another job especially if you are over 50!!

Andy_L

AVCs (especially since youre leaving the company) are a bad idea as you are tied into the employers scheme rules
The money can be put into a SIPP, stakeholder or personal pension without disturbing the taxman. Which (or indeed if any) are the best idea depends on your personal circumstances