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Redundancy payment over £30k - Can I save tax?

Good evening all. Long term forum member, but new ID for anonymity.

After almost 20 years working for my current employer the time has come to take redundancy. I have no other job to go to so I will need to pay off debts and live off my redundancy payment for some time.

My payment is well over £30k which I know is the tax free limit. The tax payable on the amount over £30k will hit that nasty tax band (that no-one ever seems to talk about?) between £100k and £120k when you lose a whopping 62p in the £ to the taxman.

Is there any way I can avoid paying all this to tax? eg am I able to try negotiating with my employer to take £30k now and the balance in the new tax year? I need the cash now so I cant put it into a Pension and save on the tax that way.

Any help or advice much appreciated.

Replies

  • Quick addendum question: When my tax gets deducted automatically from my final payment, in people's experience are they likely to undercall or overcall the deduction for tax? If they overcall the deduction how quickly can I claim the amount owed?
  • edited 22 October 2018 at 9:14PM
    Dazed_and_confusedDazed_and_confused Forumite
    6.5K Posts
    Uniform Washer
    edited 22 October 2018 at 9:14PM
    Is there any way I can avoid paying all this to tax? eg am I able to try negotiating with my employer to take £30k now and the balance in the new tax year? I need the cash now so I cant put it into a Pension and save on the tax that way.

    This doesn't make sense. If you need the money now what use is it trying to get part of it paid in the next tax year?

    With taxable income in excess of £100k you will be required to complete a Self Assessment return so any refund due will be dependent on how quickly you file the return.

    If you owe additional tax for 2018:19 then this will usually be payable on 31 January 2020.
  • Thanks for the info. When I say I need it now I mean over the coming months rather than 10+ years away when I can dip into my pension.
  • edited 27 October 2018 at 7:17AM
    marlotmarlot Forumite
    4.8K Posts
    Part of the Furniture 1,000 Posts Name Dropper
    Forumite
    edited 27 October 2018 at 7:17AM
    ...
    Is there any way I can avoid paying all this to tax? ....
    You could make a substantial contribution to your pension or to charity.


    If you decide on the charity route ... I had a CAF account, so put about 10% of my redundancy money into it. I've been gradually winding it down over the last six years - every time I contribute to charity I just write a CAF cheque.
  • getmore4lessgetmore4less Forumite
    46.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Forumite
    If you don't plan to work or claim JSA use a P50.
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