Redundancy Sacrifice

Hove_Womble

Hello folks,
I wonder if somebody could advise me on the above as I've only just been made aware of it and most posts about this appear to be very old.

I am about to be made redundant after 22 years of service, and will receive a pre-tax payment of around 100k.

It has been suggested to me that I should ask for 'redundancy sacrifice' and ask my employer to pay a portion of my redundancy pay directly into a private pension fund (I don't want to stay with my employer one).

However, I am struggling to find much information on this. Is it better, for instance, to do this than to take my (taxed) redundancy payment and then start a SIPP etc and claim the tax relief?

Many thanks
Matt

kidmugsy

Hove_Womble wrote: »

I am about to be made redundant ... and will receive a pre-tax payment of around 100k.

It has been suggested to me that I should ask for 'redundancy sacrifice' and ask my employer to pay a portion of my redundancy pay directly into a private pension fund...

(i) Check that the first £30k is tax-free: if so (and that's usual) you are discussing £70k.

(ii) You presumably want to avoid higher rate income tax on it. You are currently allowed to put only £50k p.a. into pensions and still get the tax advantages, but - and it's a big but - you can carry forward any unused portion of the £50k p.a from the preceding three (or is it two?) years.

In your shoes I think I might consult an IFA on the best way to play this.