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Redundancy Payment - What counts towards the £100K Tax
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FudgeHouse
Posts: 17 Forumite
Good morning
I am being made redundant from my current employer and will be paid a Redundancy Payment of just under £60K, of which the first £30K will be free of tax.
My total income for the tax year (including that full £60K) will be around £113K (Current Job + Redundancy Pay + a new job which I will start immediately)
My question is whether the first £30K of untaxable income is completely disregarded for income tax purposes (such that HMRC will consider my income to be £83K for the tax year), or is they still count that £30K as income and therefore I will fall in to the 'over £100K' bracket and therefore I will start to lose my Personal Allowance ?
Thanks
I am being made redundant from my current employer and will be paid a Redundancy Payment of just under £60K, of which the first £30K will be free of tax.
My total income for the tax year (including that full £60K) will be around £113K (Current Job + Redundancy Pay + a new job which I will start immediately)
My question is whether the first £30K of untaxable income is completely disregarded for income tax purposes (such that HMRC will consider my income to be £83K for the tax year), or is they still count that £30K as income and therefore I will fall in to the 'over £100K' bracket and therefore I will start to lose my Personal Allowance ?
Thanks
0
Comments
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The £30k does not form part of taxable income.0
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The £30k does not form part of taxable income.
Thanks - so, I know that the £30K is not taxable, but just to confirm you're saying that as it is not taxable it also does not form part of my income to calculate rates of tax ? If so that's the news I wanted :-)0 -
Conversely savings interest and dividend income taxed at the 0% "Personal Savings Allowance" and "Dividend Allowance" rates is still taxable income and does form part of your total income for adjusted net income purposes.0
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Just wait until the end of the year?0
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FudgeHouse wrote: »Good morning
I am being made redundant from my current employer and will be paid a Redundancy Payment of just under £60K, of which the first £30K will be free of tax.
My total income for the tax year (including that full £60K) will be around £113K (Current Job + Redundancy Pay + a new job which I will start immediately)
My question is whether the first £30K of untaxable income is completely disregarded for income tax purposes (such that HMRC will consider my income to be £83K for the tax year), or is they still count that £30K as income and therefore I will fall in to the 'over £100K' bracket and therefore I will start to lose my Personal Allowance ?
Thanks
If you get a new job lined up fairly soon, it can be a good time to top up your pension.0 -
Thanks for everyone's replies - I'm reassured now I'm not going to have my Personal Allowance eaten away ! :T0
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