Quick redundo tax question

SarahSo

Hi all
i am redundant at the end of this month, I understand that i don't pay tax up to £30k. I am trying to work out if it will push me into the 40% tax bracket when i get another job.

My question is - having worked six months of the tax year, does my redundancy, either above or below £30k, count towards my annual income for tax purposes.

For example - if i get a redundancy payment of £40k, then £30k is tax free and i pay tax on the other £10k. If i then get another job within the tax year - does either the £30k or the £10k count towards my annual income?

I hope i made that clear, i am certainly confusing myself at the moment, my HR department don't appear to understand the question!

Thanks for reading.

notanewuser

SarahSo wrote: »

Hi all
i am redundant at the end of this month, I understand that i don't pay tax up to £30k. I am trying to work out if it will push me into the 40% tax bracket when i get another job.

My question is - having worked six months of the tax year, does my redundancy, either above or below £30k, count towards my annual income for tax purposes.

For example - if i get a redundancy payment of £40k, then £30k is tax free and i pay tax on the other £10k. If i then get another job within the tax year - does either the £30k or the £10k count towards my annual income?

I hope i made that clear, i am certainly confusing myself at the moment, my HR department don't appear to understand the question!

Thanks for reading.

It's the way you're asking it.

Only the £30k is tax free*. Anything else, including salary, interest on savings, bonuses etc is taxable. So yes, the 10k counts towards your total annual income. It makes no sense for it to work any other way.

(*and only if it contains no PILON)

SarahSo

Thanks, i thought that was the case - I'm just looking for an excuse not to work again till April

getmore4less

It gets a bit more complicated when you factor in NI on future income.

you can get caught by 52% tax/NI