Redundancy Payment and Tax Bands

Major_Clanger_2

Probably a naive question - but I just wanted to check....

Whilst I understand that the first £30k of a redundancy payment is exempt from income tax, does it in any way count as earned income for the purposes of tax banding? For example - if I'd earned £20k so far in a year and then received a £30k redundancy payment - would any subsequent income be taxed at 40% (as I've received £20k + £30k) or at 20% (as I've earned £20k and the £30k falls outside of these calculations)?

FIREDreamer

Major_Clanger_2 said:

Probably a naive question - but I just wanted to check....

Whilst I understand that the first £30k of a redundancy payment is exempt from income tax, does it in any way count as earned income for the purposes of tax banding? For example - if I'd earned £20k so far in a year and then received a £30k redundancy payment - would any subsequent income be taxed at 40% (as I've received £20k + £30k) or at 20% (as I've earned £20k and the £30k falls outside of these calculations)?

No, it is ignored. Not taxable in any way, shape or form.