Hi
I am being made redundant from the NHS in the next couple of months. I will get 2 years salary as have worked for >30 years. This will total approx £80k.
My annual salary currently is £43k so currently a basic rate tax payer.
My understanding is the first 30k is tax-free, tax will therefore be payable on £50k.
Am I correct in assuming that by receiving the payment in this current tax year, most of the 50k will initially be taxed at the higher rate? see below
By the time I receive the redundancy I will have worked approx 10 months of current tax year - i.e. approx £36
Thus approx 14K will be taxed at 20%
Approx 36K will be taxed at 40% ??
I have calculated tax liability as £15,800?
I am aware of 1 way of reducing the tax liability by putting in a pension e.g SIPP (which I have already).
Could anybody explain how the tax relief will flow on putting in the SIPP?
Will I automatically get 20% on a certain amount - what will that amount be (have only put in £1600 this year into SIPP)
On the remaining amount (whatever that is) will I have to fill in a tax return form via HMRC (which I do not usually do as PAYE)
Hope that makes sense.
Are there any other ways of avoiding or reducing the tax liability?
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