Quick question re tax on VR

pixelchick10

Hi I'm getting a voluntary redundancy payout at the end of April 2023 (ie next month but into next tax year). Does the £30,000 tax free allowance come on top of the £12,570 personal allowance for the year? ie so say I didn't earn any income apart from the payout that year, I'd be taxed on anything over £42,570 cheers for any info

Linton

The annual tax allowance and the £30K tax free redundancy lump sum are completely separate. So if you had no oher income in te tax year beyond a £42570 redundancy package taken at the start of the year you would not be liable for any tax.  However because of the way PAYE works you would be charged tax and need to reclaim it since HMRC dont know that you have no other taxable income until the end of the tax year.

pixelchick10

Understood thanks so much I’m thinking of putting the rest of the payment over £30000 into a Sipp pension so believe I will have to reclaim any tax owed back as you say from HMRC