Redundancy pay

[Colgates_shaving_foam]

Deepest apologies T4Tommo for any confusion, from now on I will put my exact location on any of my posts to avoid any confusion.
At the mo I'm on the bog in Taupo Bay, in Northern NZ enjoying a beautiful spring morning and waiting to watch the water go down the plug hole the opposite way to the Northern Hemisphere when I wash my hands.
Oh, and it's 10.04am, if that helps.

Where are you now?

This could run and run, and run.

 

[1finny]

Deepest apologies T4Tommo for any confusion, from now on I will put my exact location on any of my posts to avoid any confusion.
At the mo I'm on the bog in Taupo Bay, in Northern NZ enjoying a beautiful spring morning and waiting to watch the water go down the plug hole the opposite way to the Northern Hemisphere when I wash my hands.
Oh, and it's 10.04am, if that helps.

Can you post a vid of the water
(Not for proof - just I’d like to see it)

 

[atypical_boro]

Maximum £60k a year, I think

Thanks for ALL responses on this btw.

If you put £60k in your pension, and £30k is tax free, is that £90k that is basically non-taxable income?

 

[gravy173]

It would be £60k less any pension payments already made this year but with the ability to also use up any remaining allowance from the previous two years.

 

[Steve Bee]

Sound like you need to ask them to pay the bulk of it on 6th April

 

[Ex Footy Legs]

Thanks for ALL responses on this btw.

If you put £60k in your pension, and £30k is tax free, is that £90k that is basically non-taxable income?

What gravy just said and I haven’t reread the whole thread so this may be known to you, once you put the 60k in your pension I’m assuming you’re 55 or older therefore you can take 25% of the 60k, tax free once it’s in your pension therefore in theory 45k tax free and what gravy is saying also above…

 

[atypical_boro]

What gravy just said and I haven’t reread the whole thread so this may be known to you, once you put the 60k in your pension I’m assuming you’re 55 or older therefore you can take 25% of the 60k, tax free once it’s in your pension therefore in theory 45k tax free and what gravy is saying also above…

I’m nowhere near 55 mate. I feel too young to be having this conversation.

Thanks again for responses.

 

[t4tomo]

Thanks for ALL responses on this btw.

If you put £60k in your pension, and £30k is tax free, is that £90k that is basically non-taxable income?

Potentially quite a bit more than £60k can go in your pension, because of the carry over of allowances from prev 3 years.
see:

Tax on your private pension contributions

Tax you pay and tax relief you get on contributions to your private pension - annual allowance, lifetime allowance, apply for individual protection

www.gov.uk

However obviously once in your pension pot, you cant get at that cash until you are 55, so just be sure you don't need it, and you will pay eventually tax on 75% of it as you take it, out at whatever your tax rate is at that time,
So its not tax free, its just "no tax now and probably less tax at some point in the distant future". And obviously it should grow into a good deal more than £60k in the meantime, and you dont pay tax on that growth.

The £30k redundancy is truly tax free.

*Caveat this advice doesn't apply if you sat on the loo in New Zealand.... ;)

 

[atypical_boro]

Potentially quite a bit more than £60k can go in your pension, because of the carry over of allowances from prev 3 years.
see:

Tax on your private pension contributions

Tax you pay and tax relief you get on contributions to your private pension - annual allowance, lifetime allowance, apply for individual protection

www.gov.uk

However obviously once in your pension pot, you cant get at that cash until you are 55, so just be sure you don't need it, and you will pay eventually tax on 75% of it as you take it, out at whatever your tax rate is at that time,
So its not tax free, its just "no tax now and probably less tax at some point in the distant future". And obviously it should grow into a good deal more than £60k in the meantime, and you dont pay tax on that growth.

The £30k redundancy is truly tax free.

*Caveat this advice doesn't apply if you sat on the loo in New Zealand.... ;)

Thanks. And yes someone explains this to me a little yesterday.

 

[atypical_boro]

I don't THINK this was mentioned above, but if your redundancy pay comes into your current account, does it then instantly become taxable even if you put it in your pension, or can you chuck it straight into your pension and avoid some of the tax? Do you have to prove this in some way?

In other words, does your employer have to pay it directly into your pension for you to reap any taxation benefits?

 

[ForssAwakens]

I don't THINK this was mentioned above, but if your redundancy pay comes into your current account, does it then instantly become taxable even if you put it in your pension, or can you chuck it straight into your pension and avoid some of the tax? Do you have to prove this in some way?

In other words, does your employer have to pay it directly into your pension for you to reap any taxation benefits?

If your employer doesn’t put it straight on I reckon you would have to notify HMRC

 

[ThatFragranceGuy]

I don't THINK this was mentioned above, but if your redundancy pay comes into your current account, does it then instantly become taxable even if you put it in your pension, or can you chuck it straight into your pension and avoid some of the tax? Do you have to prove this in some way?

In other words, does your employer have to pay it directly into your pension for you to reap any taxation benefits?

I'd imagine by virtue of it being in your current account it has been paid to you via Paye? In that case you'd need to speak to hmrc to see what the craic is - unless it was under the tax free limit in which case you can then apply it

 

[atypical_boro]

I'd imagine by virtue of it being in your current account it has been paid to you via Paye? In that case you'd need to speak to hmrc to see what the craic is - unless it was under the tax free limit in which case you can then apply it

Yeah, I mean the bit that would be over the tax free limit.

 

[atypical_boro]

If your employer doesn’t put it straight on I reckon you would have to notify HMRC

But does notifying them mean I could get out of paying tax on it? Cos if not, seems pointless?

 

[ForssAwakens]

But does notifying them mean I could get out of paying tax on it? Cos if not, seems pointless?

Yes, if you get paid and put into your pension you should be entitled to tax relief on it

Alternatively you could speak to pension provider as they may be able to accept a lower amount and claim the tax on your behalf

 

[atypical_boro]

Yes, if you get paid and put into your pension you should be entitled to tax relief on it

Alternatively you could speak to pension provider as they may be able to accept a lower amount and claim the tax on your behalf

Thanks!

 

[t4tomo]

I don't THINK this was mentioned above, but if your redundancy pay comes into your current account, does it then instantly become taxable even if you put it in your pension, or can you chuck it straight into your pension and avoid some of the tax? Do you have to prove this in some way?

In other words, does your employer have to pay it directly into your pension for you to reap any taxation benefits?

what account it gets paid into is a bit of a red herring:

If your employer is paying you redundancy pay, they will pay the first £30k without deducting tax and they will tell you they have done this. If you do a tax return, this goes in a separate "box" to normal employment income.

If you subsequently pay some of that money or to be honest any of your money into personal pension pot, you are entitled to tax relief on that. The pension provider may well claim basic rate relief at source when it gets paid in -you need to confirm that with them - if not that and higher rate relief can be clamed on your tax return.

 

[atypical_boro]

what account it gets paid into is a bit of a red herring:

If your employer is paying you redundancy pay, they will pay the first £30k without deducting tax and they will tell you they have done this. If you do a tax return, this goes in a separate "box" to normal employment income.

If you subsequently pay some of that money or to be honest any of your money into personal pension pot, you are entitled to tax relief on that. The pension provider may well claim basic rate relief at source when it gets paid in -you need to confirm that with them - if not that and higher rate relief can be clamed on your tax return.

many thanks - helpful. something has actually come up on this today!

 

[the_holgate_roof]

We’ve been given the option of putting anything over the 30k into the pension pot, which I am going to do.

 

[atypical_boro]

We’ve been given the option of putting anything over the 30k into the pension pot, which I am going to do.

And will work do that for you? My predicament is to do with tax AND childcare benefits. If I do as Tommo suggests above with my reasonable pay off, whilst I may be able to claim tax relief, I don't know whether I'm still allowed to do tick the box that says 'I don't expect to have a taxable income over £100k this year'.