Benefit of paying redundancy to pension

Mirador

I'm due to receive a redundancy payment in April. After deducting the tax free lump sum, I will have £30k taxable amount left. If I take this through PAYE I will pay tax around £4k, leaving me with a net amout of £26k (ignoring NI)

If I have it paid in to my pension,can someone tell me how the figures will look?

I think it would be £24k to pension fund plus uplift of 25%, so total in to my fund of £30k. ( equal to my earnings for the year, as I won't be working again)

That leaves £6k as salary, would this be taxable, or is it part of my tax free allowance?

Am I right, that as there is no salary sacrifice, that the NI paid will be the same whatever I do? I am trying to calculate the net difference between both options and can't quite get my head around the figures.
Thanks to anyone who knows the answer!

jem16

Mirador wrote: »

I'm due to receive a redundancy payment in April. After deducting the tax free lump sum, I will have £30k taxable amount left. If I take this through PAYE I will pay tax around £4k, leaving me with a net amout of £26k (ignoring NI)

If I have it paid in to my pension,can someone tell me how the figures will look?

I think it would be £24k to pension fund plus uplift of 25%, so total in to my fund of £30k. ( equal to my earnings for the year, as I won't be working again)

Is your contribution going to be from net pay or gross pay? What you describe is from net pay and would be correct. If gross pay, pay in the £30k and presumably no basic rate tax relief added.

That leaves £6k as salary, would this be taxable, or is it part of my tax free allowance?

If paying from net pay as you have described, you will be taxed on the whole £30k.

Am I right, that as there is no salary sacrifice, that the NI paid will be the same whatever I do?

Whether gross pay or net pay contribution, NI is based on the whole £30k.