Tax on Redundancy Payment

Brie

Is there an option to put any of your redundancy money directly into your work pension? That might mitigate how much you lose to tax. 

As I figure it you'll have £44778 plus the 3 months work pay of £8000 less personal allowance.  So about £42k to pay tax on at 21%.  But if you start working elsewhere soon after that will very quickly get you into the 42% zone.  I believe by putting a large amount into pension you might manage to drop back down to the lower rater.  

Happy to be corrected by better people than me.

Newbiehelp01

Brie said:

Is there an option to put any of your redundancy money directly into your work pension? That might mitigate how much you lose to tax. 

As I figure it you'll have £44778 plus the 3 months work pay of £8000 less personal allowance.  So about £42k to pay tax on at 21%.  But if you start working elsewhere soon after that will very quickly get you into the 42% zone.  I believe by putting a large amount into pension you might manage to drop back down to the lower rater.  

Happy to be corrected by better people than me.

Hi Brie, yes I could put some in to my pension pot but didn't want to do that as was going to take my 25% tax free withdrawal when I am 55, if I put some in to pension that complicates things further, just wanted to take my redundancy money, pay my tax and hopefully start new job as soon as I leave, the 74,788 redundancy includes my PILON payment of £10,439, thanks for taking the time to reply!