Redundancy payment and tax

madeinireland_2

I'm considering the option of taking voluntary redundancy from my. Company in the next couple of months. The company provides an option to spread your redundancy payment over 3 tax years.

I know that the first £30k is tax free but...

If I spread the payment as follows would that still apply. There is a total of £56k on offer.

This year = 0
Next near = 43k - meaning only 13k taxed ???
Last year = 13k

Thanks...

getmore4less

I have a feeling that you can still only get one lot of £30k

this will need tax advice or some reading of the HMRC manuals

eg
http://www.hmrc.gov.uk/manuals/eimanual/EIM13530.htm

There may still be advantages in spreading the taxable over multiple years and always the use of pensions to mitigage further.

madeinireland_2

This is all the same payment and I know I would only get one £30k.

It's just to help with tax planning you can take it over different tax years. Since I have almost earns up till the higher rate tax limit I was going to take zero for this tax year so just wanted to confirm that the payment next tax year can count as the 30k.

I've tried reading up but can't see any confirmation.

Thanks.

skadupuk

Why not take the £30k this year (tax free) and then spread the balance over the next two years?


No point in delaying that payment as it has no tax impact and you could at least earn a small amount of interest on it.

p00hsticks

madeinireland wrote: »

It's just to help with tax planning you can take it over different tax years. Since I have almost earns up till the higher rate tax limit I was going to take zero for this tax year so just wanted to confirm that the payment next tax year can count as the 30k.

Perhaps I'm missing something but as the first £30k is tax free regardless, then why are you propsing to wait until next tax year to take it ? Surely what you have already earned and what rate tax you are therefore paying is only relevant if you're taking more than £30k ?

The most efficient way of splitting the remaining £26k over the following two years is going to depend on what other income you expect to have in those years - you want to ensure that you fully use your tax allowance each but try to avoid paying higher rate tax each year.....

madeinireland_2

The reason I am not taking the £30k this year is that I have two kids at uni and their bursary is dependant on my earnings for this year and it's their final year.

I'm not sure how the £30k would affect that if I had to declare it - so just wanted to avoid that issue.

getmore4less

One other risk with delayed payments is the company goes bust.

AJ1982

From what I can see the first £30k is tax free and there are some options on this link, including pension...

I share the concerns about company going bust. If it was Feb/March maybe, but its along way until April 2016.

http://www.taxation.co.uk/taxation/Articles/2013/02/27/303301/taken-out