Redundancy & Saving Tax - Pension Contribution?

wackojackouk

Good evening people.

I have recently been told that my role is at risk of redundancy and the likelihood due to my specialization is that I won't find another role in the company.

I've been offered a really good package but have a couple of questions that perhaps someone on here might be able to help me with.

I understand the first £30k is Tax (and NI) Free

I am lucky enough to also be receiving some additional money; some for severance (redundancy) and also some other for Notice and Holiday.

My understanding is that I will pay tax and NI on the amount above the £30k. I am a 40% tax payer so HMRC will be taking a nice chunk of it

I believe I can contribute some money towards my company pension to save the tax rate (limit per year is £40k I think) - it's not that much btw.

Therefore I was wondering do I have to do this now - when I get laid off OR could I decide at a later date to add say £10k to a pension and then can you claim the tax relief on it (not sure where I heard you can do this).

Any advice would be most grateful

Thanks

WJUK

fancyabrew

I'm in the exact same boat. Looking for the most tax efficient way to handle the pay out which I've just got with the tax man taking nearly £17k

tacpot12

The link here explains what you need to know. https://moneytothemasses.com/tax/tax-mitigation-tax/how-can-to-reduce-the-tax-on-a-redundancy-payment

Just be careful to check the figures for your own circumstances.

Kynthia

Post in the pensions board for specific advice. However you can pay into any pension scheme during the tax year and claim back any tax you've "overpaid".

After a redundancy I waited until March to make a payment into a private pension scheme, then wrote to the HMRC to claim back the higher rate tax relief as the schene only auto claims the basic rate tax relief for you. Waiting until the end of the financial year means you know your fulltaxable income should you have new employment, but do you know if there are any advantages to your employer's scheme?

ratechaser

There are two other potential advantages of doing it now versus later into a personal pension. First is if the company scheme offers any level of matching contributions. Second is if the company scheme works on a salary sacrifice basis, in which case you would get the tax advantages PLUS relief on NI contributions as well.

Incidentally, this is what I did on getting a rather hefty settlement a few years back.