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Where Taxpayers and Advisers Meet

Redundancy

mtcdj
Posts:1
Joined:Tue Feb 16, 2021 10:17 pm
Redundancy

Postby mtcdj » Tue Feb 16, 2021 10:23 pm

I am due to receive £76000 in redundancy.

I know the first £30000 is tax free, but how much will I pay on the remainder as a basic rate taxpayer living in Scotland?

Also can I put some of this into my employers pension fund to avoid paying tax?

Many Thanks

ben_power
Posts:45
Joined:Tue Feb 27, 2018 8:34 pm

Re: Redundancy

Postby ben_power » Sun Feb 21, 2021 1:54 pm

If you take the payment (in addition to the £30,000) as a lump sum you will pay tax at your marginal rate, all as additional income (see rates below). You'll want to check when the payment is liejly to be received as this may fall into the new tax year which could change the tax due.

Personal Allowance Up to £12,500 0%
Starter rate £12,501 to £14,585 19%
Basic rate £14,586 to £25,158 20%
Intermediate rate £25,159 to £43,430 21%
Higher rate £43,431 to £150,000 41%
Top rate over £150,000 46%

You could also chose to pay some of the redundancy into your employers pension (or personal pension) but how and if this is sensible depends on the type of pension you have, your annual allowance and potentially your lifetime allowance, your age, your retirement plans your appetite for investment risk and health. Paying into a pension is often a very sensible thing to consider but it is complex and you should seek independent financial advice.


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