Resignation date - any advantage in doing it at the start of a tax year?

silvercar

OH has just given 6 months notice. Mainly choosing the time to get some income in the next tax year at a lower tax rate. Depends on your work, but it has the advantage for him that he can decline to get involved in new "difficult" projects on the grounds that he won't be around to finish them.

optoutDB

I resigned the same day I received my meagre bonus.  Not because it was meagre, but because I wanted it !

tamste

With some DB schemes they calculate your service to the day you leave, including Saturday and Sunday. If yours is the same, leave on Sunday 30th rather than Friday 28th March and you get 2 more days service.

2childmum2

DH is retiring on 23rd April. He bought holiday this year and will probably not take it so the money will be paid back to him. If he retired this tax year it would be taxed at 40% whereas waiting til next tax year means it will only be 20%. Having decided to wait til April he decided to go after Easter to get paid for the two bank holidays.

silvercar

2childmum2 said:

DH is retiring on 23rd April. He bought holiday this year and will probably not take it so the money will be paid back to him. If he retired this tax year it would be taxed at 40% whereas waiting til next tax year means it will only be 20%. Having decided to wait til April he decided to go after Easter to get paid for the two bank holidays.

And May bank holiday? Having bought the holiday he could use it from Easter onwards so leave earlier but be on full pay for longer.

katejo

tamste said:

With some DB schemes they calculate your service to the day you leave, including Saturday and Sunday. If yours is the same, leave on Sunday 30th rather than Friday 28th March and you get 2 more days service.

I asked my pension provider about this (SAUL) and was advised to wait until after March 31st because that is the  revaluation date. I am not stopping straight away now but perhaps it is worth delaying until end of March 2026 rather than going this autumn?

GazHol

I left on the 22nd Dec as I didn’t trust payroll to get the correct amount from my redundancy into my pension and I wanted to see my last payslip before payroll stopped working for that year. (I was paid in lieu until the 31st Dec anyway)

pterri

So, had a chat to various bosses. April still penciled in but if they can shift my stressy projects onto someone else then I said I’d hang on until July on some easy gig. Works for me as I’d leave and be able to claim back (or get refunded after doing a self assessment) some tax on the 2025-26 earnings as I’ll not be in 40% territory. Also a few months more DB built up. We’ll see…

DreZZ

Albermarle said:

Triumph13 said:

The only dates that have any financial advantage are:

1. When you qualify for any bonus payment from work;
2. When you have earned enough to get a year's NI stamp;
3. End of May, to benefit from being paid for the two days off at Easter and the two bank holidays in May;

With the possible exception of #1, none of those is enough to keep working at a job you don't enjoy if you don't need to.

There can also be some benefit from working for a few months into the tax year if you have a good salary and normally pay a significant amount of 40% tax.
As a simple example if you earn £100K, each month you will pay some 40% tax. If you retire 6 months into the tax year and have no other income that tax year, then all the 40% tax you have paid will be refunded, as over the year you will have only earned £50K.

This is what I did.  My last day was end of August.  I maxed out salary sacrifice and with the employer contribution I put £40k into my company pension over the final 6 months.  I did have to top up my salary from savings but that was untaxed as it was from an inheritance.  I had 2 weeks holiday pay so ended up leaving mid August - then enjoyed freedom for what was left of the summer.  So paid very little income tax/NI in my last year and got the tax advantages putting money into the pension.