Redundancy payment moving me to a higher tax bracket

tiredmomma

Good morning!

I was recently made redundant and received the payment yesterday.

The redundancy part of the package was approx £20k, and then the other parts (PILON, holidays, overtime owed etc) was approx £10k and should be subject to tax and NI.

Up to my December pay packet, I had earned approx £24k for the year.

I have been taxed over £3200 for the £10k taxable part of my redundancy settlement because the £20k untaxed part has increased my overall pay for the year to over £53k and into the higher tax bracket.

Should the taxable portion have been calculated before they added the untaxed portion to the overall amount? Or is this correct and I have to deal with paying over £1000 more in tax than I expected due to an untaxed payment?

Please let me know if this doesn't make sense and I'll try and explain it better!
Thanks.

molerat

It will have nothing to do with the non taxable part, that is what it says on the tin - non taxable. It will be the way PAYE works on larger payments.

If you could post up your taxable pay to date at December, the taxable amount in the January pay slip and your tax code someone will give you a run through.

Are you getting another job or going to commence a pension ?

Quick bag of a fag packet illustration. To earn £24K at December is £2666 per month and total tax paid would have been £2913 or £323 per month. If you earned that £2666 plus the £10K the tax deducted in January would have been £2323