Tax on redundancy payment

Rubyroo765

Hi, I’m being made redundant in March 2020 and will get my payment on 19th April. I’m getting about £61,000, I know that £30,000 of that will be tax free but what will I be taxed on the remaining amount? As it will be the new tax year will it be 20% or 40%?
I’m confused and would be very grateful if someone has any knowledge of tax.

BoGoF

Depends what tax code is used. You will basically have £31,000 of taxable income in month 1 of the tax yea so likely to be a combination of 20, 40 and 45 per cent as the annual equivalent of that takes you into the 45% bracket.

Do you intend seeking new employment?

Rubyroo765

Hopefully I will be able to find a job 🤞🏻

BoGoF

Rubyroo765 wrote: »

Hopefully I will be able to find a job 🤞🏻

In that case your tax position will sort itself out if you give new employer your P45.

kev2009

Hi,

Perhaps put some into your pension to lower the tax you will pay, if you haven't used your full allowance and don't need they money now?

Kev

Rubyroo765

That is an option the company has offered me so will look into it.

DoctorStrange

You'll possibly have around £13,650 deducted in April for Tax and NIC, but depending on when you start work again/what those earnings are you may find yourself paying less tax each month than normal for the rest of the year as your tax code will adjust things so it all balances by the year end.