20% or 40% on VR Offer

Short and sweet,  On a £70K VR offer of which £30K is tax free, do you pay 20% or 40% tax on the remaining £40k
Thank you.

Comments

  • 400ixl
    400ixl Posts: 2,613
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    Depends on what you have already earned in the tax year. It is just seen as additional income. You then have to also think about the rest of this financial year when you get another job as that will also be taxed at the combined rate.
  • Barney15c
    Barney15c Posts: 25
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    I wont be working after i leave at the end of Aug 22 , my VR will easily last me into my retirement and taking my works pension in Feb 2024. Gross pay will total  £16500 by end of Aug 22 and tax code L1250.
  • daveyjp
    daveyjp Posts: 12,379
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    So your earnings for this tax year will be £56,500?

    You will pay 40% on all income above £50,271.

    NI is calculated on your monthly pay, so you will pay NI on the combined salary for August and the £40k.
  • Barney15c
    Barney15c Posts: 25
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    no about £40k  is my pre tax income April 22to August 22 inclusive is 5 x £3300 =£16500 after that i wont be earning as i don't intend to work..

  • molerat
    molerat Posts: 31,519
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    edited 21 May 2022 at 9:03PM
    Back of fag packet calculation assuming you receive the redundancy money with your August pay
    You will have received £56500 YTD. With PAYE 40% tax will kick in at £20950 YTD in August so you will be taxed around £15.5K that month, £17360 YTD. Tax due on £56.5K for the whole year is just over £10K, 40% starting at £50271, so if you are not intending to receive any further taxable income for the rest of the year you will be able to reclaim around £7300 tax as soon as you receive your P45. https://www.gov.uk/claim-tax-refund



  • theoretica
    theoretica Posts: 12,223
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    Barney15c said:
    no about £40k  is my pre tax income April 22to August 22 inclusive is 5 x £3300 =£16500 after that i wont be earning as i don't intend to work..


    Exactly - 16500 salary + 40000 taxable VR = 56500 total income.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • superbigal
    superbigal Posts: 600
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    edited 24 May 2022 at 1:57PM
    If in Scotland 41% higher rate tax and it starts at £43,663
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