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Redundancy Payment - What counts towards the £100K Tax

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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

Comments

  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    The £30k does not form part of taxable income.
  • 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 :-)
  • 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.
  • Me2you
    Me2you Posts: 104 Forumite
    Just wait until the end of the year?
  • marlot
    marlot Posts: 4,966 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    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
    When I was made redundant (6 years ago), the £30k was not on my gross pay on the payslip and not on my P45. I believe your income will be shown to HMRC as 83k.


    If you get a new job lined up fairly soon, it can be a good time to top up your pension.
  • Thanks for everyone's replies - I'm reassured now I'm not going to have my Personal Allowance eaten away ! :T
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