Redundancy counted as income.

Tax_Slave

I'm facing redundancy next year and have a question with reference to what is counted as income.

Case example:

Fred gets made redundant and has a payout of 90,000 GBP.

Income for year to redundancy = 45,000
Redundancy payment = 90,000
Tax free part of redundancy = 30,000

So is Fred's income counted as ;
45,000 + 90,000
or
45,000 + 60,000 (Taxable part of redundancy payment ) ?

Thanks in anticipation of any replies.

Andy_L

If any Payment in lieu of notice is given instead/as well as redundancy and it is a contractual right then it is taxable.

As you sayThe 1st 30k of any redundancy payment is tax free, the rest is taxed as income. So 45k + 60k is Fred's taxable income

Tax_Slave

Andy_L wrote: »

If any Payment in lieu of notice is given and it is a contractual right then it is taxable.

The 1st 30k of any redundancy payment is tax free, the rest is taxed as income

The 1st 30k of any redundancy payment is tax free,

But does this 30,000 still count as income even thou it is not taxed ?

I.E. If you gained employment post redundancy, would your income to date be plus the 90,000 redundancy or 60,000 redundancy.
This could possibly push you into the 45% tax bracket !

sangie595

Tax_Slave wrote: »

The 1st 30k of any redundancy payment is tax free,

But does this 30,000 still count as income even thou it is not taxed ?

I.E. If you gained employment post redundancy, would your income to date be plus the 90,000 redundancy or 60,000 redundancy.
This could possibly push you into the 45% tax bracket !

It is tax free. So getting another job does not affect that.

Tax_Slave

sangie595 wrote: »

It is tax free. So getting another job does not affect that.

Yes I know the first 30K is tax free.

The question is ;
Is the 30K that is tax free still counted as income for calculating future tax on income ?

I.E.
- income prior to redundancy = 45K
- Redundancy = 90K (30K is tax free)
- New job and earning ...Is prior income calculated as ;
45K + 90K = 135K
or
45K + 60K = 105K for future tax calculations on income that tax year ?


Anyone know ?

sangie595

No it is not counted as income. Ever. So getting a new job has no effect. As I said. You are overthinking this. The £30k is always outside the taxable income.

Tax_Slave

sangie595 wrote: »

No it is not counted as income. Ever. So getting a new job has no effect. As I said. You are overthinking this. The £30k is always outside the taxable income.

Thanks , that is good news.