Tax on lump sum?

Belair

I will shortly be made redundant and also have the option to take early retirement. My pension is a final salary and the pensions dept told me that it maybe better to retire early from active service, rather than from a deferred pension. The figures provided have almost convinced me to retire from active service.
My question is, the first £30K of my redundancy lump sum is tax free, if I also take early retirement at the same time, is my pension lump sum taxed?

Please help a stressed money saver wannabe!

cyclonebri1

:rolleyes:

Belair wrote: »

I will shortly be made redundant and also have the option to take early retirement. My pension is a final salary and the pensions dept told me that it maybe better to retire early from active service, rather than from a deferred pension. The figures provided have almost convinced me to retire from active service.
My question is, the first £30K of my redundancy lump sum is tax free, if I also take early retirement at the same time, is my pension lump sum taxed?

Please help a stressed money saver wannabe!

I am pretty sure it is not taxable, if it is I'm in the s**t. :rolleyes: :rolleyes:

In my view redundancy PLUS early retirement is a pretty cool option, wow,,,,,,,,,

Belair

cyclonebri1 wrote: »

:rolleyes:
In my view redundancy PLUS early retirement is a pretty cool option, wow,,,,,,,,,

I know

Swings and roundabouts mate!

mymatebob

Yeah it is great - you get a load of money which you can spend and then look at your reduced income each month and wonder why you now need another job

Belair

Reply deleted as previous poster edited and my reply then didn't make sense.

cyclonebri1

mymatebob wrote: »

Yeah it is great - you get a load of money which you can spend and then look at your reduced income each month and wonder why you now need another job

Bob, you don't HAVE to spend it, it's yours and you can do with it as you like. The OP understands that, I think, if he didn't he does now.

He is in the enviable position of being made redundant and does not feel hard done to by this, (forgive me if I am wrong), and can also recieve his early retirement with a final salary scheme.

Now that is a result.?

Belair

I don't feel hard done by and am thanking my lucky stars.
But, I don't want to take early retirement if it means I lose out to the taxman.



Belair:female:

CLAPTON

you are allowed to divert the redundancy money over 30k into your pension on a tax free basis and get an enhanced pension... if so it might be worth considering

Belair

Thanks for the info Clapton, but that is not an option.

dekh

If you are getting made redundant, unless the tax law has changed, see if you can get salary in lieu of notice - it should be tax free too. Your employer might go for this if they can spare you early as they also get a tax break on company NI (I believe).

It's definitely worth a punt. - and I could be wrong now but I managed it 4 years ago.

Belair

Thanks, yes, I will get payment in lieu of notice. 3 months worth.:T

The government website mentions redundancy and early retirement, but nothing about the tax. :mad: