Redundancy - shift pay to next tax year?

CashUnderMattress

dear fellow savers, thanks for having me in this forum

I am about to receive a substantial redundancy payout (~100k) which is great, yet happens at a rather inconvenient time (31 March) in the tax year which will result in the best part of it to be taxed at 45p.

Considering I am planning to take a 3-6 months break from work to recharge my brain/physical batteries, I was wondering if there was a way to effectively shift the tax competency of this (or part of this) income to the following tax year, which will most likely result in it being taxed at 40p (or more, depending on new job, but that would be a good problem to have)

Are there any financial/tax advisors in the readership who would be able to advise/point me in some direction?

To anticipate the suggestion on putting them on pension - maybe a part will go there, however I am still a couple of years short of 40 and at this stage in life I'd rather have the cash available for home/family etc upgrades - London is expensive :mad:

eskbanker

Have you asked your employer if they're prepared to defer payment of some or all of it by a week? It may not suit their tax/financial planning to do so but no harm in asking....

CashUnderMattress

hi there, i indeed asked, but it seems it was budgeted in this FY and whatever is not spent goes lost: it can't be carried over.

kangoora

IIRC £30k is tax-free. Will your employer pay up to the maximum (£40k) into a pension (reduces taxable earnings) depending on how much you have already contributed this year.

Do you have any pension carry forward (and the salary to match) to make larger pension payments?

Obviously these suggestions will mean you can't access the money until 55+ (depending on your age) but they will benefit your pension and you can claim back from HMRC the higher rate tax element.

milton1970

It will be treated as taxable income in 19/20 unless you can agree with you employer to shift your exit date by a week. You could offer to take unpaid leave or holiday to help.

I don’t get the position that it is unmovable due to budget reasons ... organisations would tend to make provisions for severance in their financial accounts so this is just cash.

They should be making reasonable effort to support you ..