Redundancy Payment and Pensions

Bobl

I recently accepted voluntary redundancy and have received the payout minus the 40% tax rate (for the amount over £30K). I have been reading that one option is to make a payment into a pension scheme which would attract a government top up of 40% of the amount paid in. Can I pay this into an existing pension and would that be tax efficient?

zygurat789

Bobl wrote: »

I recently accepted voluntary redundancy and have received the payout minus the 40% tax rate (for the amount over £30K). I have been reading that one option is to make a payment into a pension scheme which would attract a government top up of 40% of the amount paid in. Can I pay this into an existing pension and would that be tax efficient?

A payment into an approved pension scheme is a tax deductible amount so if you put £80 in your pension your pension will be worth £100.
You will then get the other £20 as a tax rebate which you have to claim from HMRC.
So for £60 you have a pension fund worth £100. I think that's good value.

xylophone

Don't forget the usual rules re annual allowance/earnings/carry forward etc.

http://www.hl.co.uk/pensions/interactive-calculators/carry-forward-annual-allowance-calculator