NHS Voluntary Redundancy

ChunkyBear72

Hello, this is my first post :-)
I'm after some advice about ideas for a managing a potential redundancy package.
In a couple of months I will find out if I can leave the NHS through a VR scheme. I have long service (25year+)  and I am also a high earner (£80k+) so I would get the maximum package but would like to hear if there are any ways I can reduce my tax burden. I am not old enough to take a pension and would like to restart employment after 1-2 months. I am in the NHS pension but am also not clear whether the redundancy package would allow me to pay a lump sum into my NHS pension or whether I would bear the full brunt of tax at higher rate. I am planning to speak to a financial adviser once I have confirmation of VR but wondered anyone has any ideas of other ways to save/ invest or even create a passive income when i leave work. 
Many thanks and look forward to hearing from you.

GrubbyGirl_2

Have you read these?

https://www.nhsbsa.nhs.uk/employer-hub/redundancy-overview-employers/redundancy-options-members

https://www.nhsbsa.nhs.uk/sites/default/files/2017-08/Benefits at retirement - Premature retirement factsheet (V4) 08.2017.pdf

Much depends on your age.  You can retire early without reduction for retiring early (part of your redundancy will go into your pension and any balance paid to you).  You can then continue working in another role and add to your pension

ChunkyBear72

I'm 51 so not sure I'm ready to retire just yet :-) At the age I am I would like to sort my current finances out, and potentially invest some money also. I've not been in this position before so I would like to take the opportunity to maximise the benefit if I can.

GrubbyGirl_2

Why can't you retire and return?  Get your pension but you can carry on working in another role within the NHS 

https://www.england.nhs.uk/looking-after-our-people/the-programme-and-resources/pensions-and-flexible-working-in-your-later-career/retire-and-return/

ChunkyBear72

I am ready to leave the NHS as the restructure is creating real chaos. VR will give me the opportunity to consider my next steps whilst providing a decent package. Retire and return offers no real benefit and in my current role when they are making cuts I do not think this is even on the table.

monkey-fingers

I don't think anyone really answered your OP though about tax efficiency.

Firstly, obviously the first £30k of your redundancy is tax free.
Secondly, you can put £60k a year into a pension. Clearly, you have put some into your pension this tax year, but it's unlikely to be the full £60k. I took a quick look at the link above - it didn't mention that you could put it into your NHS pension. You could, however, open a SIPP and put the balance of the £60k in there, then claim the tax back (but sadly, not the NI)

In addition, you can also do this for the last 3 years too.
https://www.gov.uk/guidance/check-if-you-have-unused-annual-allowances-on-your-pension-savings

When I was made redundant earlier in the year, I would have been pushed into the 45% tax bracket.
So what I did was to take the £30k tax free. My view was that if I had to, I could live on that for a year.
At the end of that year, I turn 55, so could theoretically take the rest, now tax free, as part of the 25% I can draw from my pension (Sadly for you, it's 57).

As it happens, I picked up a contract 6 weeks later and didn't have to touch it. I spent half and put the other half into an ISA, which I've now added to, to give me a war chest (should I need it).

mr2010

I too am considering VR from the NHS after 30 years of service and would receive the 24 months maximum redundancy settlement. If my last date of service is 31/3/26 but the redundancy settlement was paid to me on 26/4/26 would this be subject to the 2026/7 taxation rules and allowances. I understand this would be financially better for me, assuming I don't work again in the 2026/7 year? Thank you for your advice.

monkey-fingers

https://forums.moneysavingexpert.com/discussion/comment/81861572#Comment_81861572

It's always on the date on your payslip.

mr2010

https://forums.moneysavingexpert.com/discussion/comment/81862220#Comment_81862220

Thank you. Can you clarify a little please. I have been told my redundancy payment will be taxed in 2026/7 and not in 2025/6 when I will have already earned my salary and so likely subject to higher tax on everything over £125k . is this correct?

GrubbyGirl_2

https://forums.moneysavingexpert.com/discussion/comment/81862275#Comment_81862275

You are always taxed in the year you receive the payment. And don't forget the first £30k is tax free. Also depending on your age you can have your redundancy money go into your pension which enables you to retire early without reduction