Redundancy Payment & Tax Liability Issue Please Help

Shooting_Star_UK

Hello, I would be greatful if anybody could help me out.

I was made redundant from my job earlier this year and under the terms of a compromise agreement will soon receive a severance payment.

Up until i lost my job I had just broken into the 40% tax payer band.

The severance payment will consist of £30k tax free plus a further amount which will be taxed at 22%.

Illustrative numbers only but If they pay me £50k am I right in thinking that I will have quite a big tax liability in Jan 2008? I would pay some tax on the
£20k that is above the tax free amount - but not enough. Would the additional tax due be 18% of 20k i.e. £3.6k?

Does anyone know how national insurance works in respect of severance payments..I'm not sure how that would impact matters.

If I have a liability of £3.6k I am interested in ways I can reduce this to zero.

I have been thinking of 1) Contributing to a SIPP or 2) making investments in Venture Capital Trusts to get 30% tax relief.

I understand VCTs quite well but SIPPs less so.

Given the liability of £3.6k how much would I need to invest in a SIPP to reduce my liability to zero? I believe I would automatically get 22% relief on SIPP investment (although this relief is "locked" into my pension). Would I qualify for an additional 18% relief in my circumstances?

My guess is that to ensure I don't owe mr taxman any money I would need to invest an initial £15.6k into a SIPP (i.e. the 15.6k would get marked up to £20k and then I would get an additional 18% relief outside of the pension on the 20k i.e. £3.6k -hence I would offset my liability)

Complicated stuff but would be greatful for any insights!!!!

Thanks