Tax on redundancy

llantwitboy

Due to be made redundant on 14 Dec after 23 years service. Have a rough idea that redundancy payment will be in excess of £30k. Anyone know of a redundancy tax calculator, so I can guage how much tax I will pay on amount over £30k. Thanks

getmore4less

Over30k it just counts as income in the tax year so 20% or 40% or more if a high earner(no NI).


It may get taxed more when paid but you can get this back either through a P50(look up HMRC P50) or PAYE during the rest of the year.

Spursman180

There is a scheme where you can choose to put the sum above £30k into your pension fund, rather than lose a chunk in tax. I'm sure there are those on here who are most able in advising you, as I suspect your own HR should be?

Pete111

Spursman180 wrote: »

There is a scheme where you can choose to put the sum above £30k into your pension fund, rather than lose a chunk in tax. I'm sure there are those on here who are most able in advising you, as I suspect your own HR should be?

Correct - most pension scheme would accept an AVC (additional voluntary contribution) and this can be a useful method of avoiding tax on any redundancy payment over 30k

OP in terms of working out how much tax you would otherwise pay, take the excess over 30k and deduct the appropriate tax (20/40/50%) from it - you will need to deduct NI also and should be aware that if you are getting a significant payment over the 30k that this may tip you into a higher tax bracket for that month than would otherwise be on an annualised basis.

If you think you have paid too much tax you can apply for a rebate via a P50 form

getmore4less

There should be no NI on the redundancy part of any payments.

Pete111

getmore4less wrote: »

There should be no NI on the redundancy part of any payments.

Sorry yes - that's correct. My mistake.

Procrastinator333

If you are nto going to work again for the rest of the tax year, you will also be due a tax refund as you will have been taxed April -Dec on the assumption you would work through to March. If you dont' work again in this tax year, be sure to write a letter to HMRC asking them to review your tax calculation for the year.