I have recently been made redundant and have been advised that I will receive a decent redundancy payment after working for the company for 29.5 years. The amount is some way above the £30,000 tax free limit. I was due to leave on 10th April 2020. I work for a very large and reputable employer, that had requested that I remain in employment for a further 3 months due to unforeseen staff shortages resulting from COVID-19. I was issued with a fresh redundancy letter stating a leaving date of 10th July 2020. I agreed to this. I have now been asked to stay on for a further 3 months until 10th October 2020, as the issues caused by COVID-19 are still causing staff shortages etc. I will be issued with a further redundancy confirmation letter. In that respect I do trust my employer, but my question is, will I be hit with extra tax on my redundancy payment (over the £30,000), given I am being asked working further into this particular tax year? 
Appreciate any help and guidance! 


  • sharpe106
    sharpe106 Posts: 3,559
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    The only extra tax you will pay will be the extra tax on the money you earn. You will still be taxed at the same tax rate. If it puts you into the next tax rate or not will depend on how much you have earned.
  • daveyjp
    daveyjp Posts: 12,376
    First Post Name Dropper First Anniversary
    Unless you will need the whole of the lump sum now work on mitigating the taxation on the amount above £30,000. Paying a lump sum into a pension is one way of doing so.
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