Redundancy money - paying minimal tax on this.......

[Ray Singh]

Calling all accountants.

I have been told that my job with Nokia will cease in September. I have been working here for over 15 years. The redundancy package is very good (4wks per year) and hence my redundancy package is a nice sweetener.
I was planning to put this towards a new family home as our current place is small and not in the right catchment area for the nice secondary schools.

Is there any way to minimize the tax which i pay on this package in order to maximize my house buying fund? Obviously i dont want to do anything illegal

[slow_poke]

Might be teaching you how to suck eggs, Ray, but have you checked that's paid at your weekly rate, or at the govt rate?

[RemainAllHoof]

I thought they were tax-free. I am almost right.

http://www.redundancyhelp.co.uk/MonTax.htm

[Ray Singh]

Only the first £30k is tax free. Then the theiving bar stewards take my money.

Its paid at my weekly standard rate. 4wks per year is a pretty decent package and i want to use this against a deposit on a new family home. Theiving government will take close to half of everything over £30k..... CRY

[blank]

My dad was made redundant at the end of last year. Well it wad voluntary but still...

A couple of things he did.

Private pensions.
Splitting his payments between tax years.


Not sure of any others but they can certainly sting a bit!

[Mr POD]

When I was (last) made redundant, I was entitled to no redundancy but 3 months salary.

I tried in vain to get them to give me it in one lump sum as redundancy, and they point blank refused. (Cash Flow they said)

I offered to split my saving in tax and NI burden, with them, but No. (Free Money to them)

I offered to let them wait 3 months and give it me in one lump sum and split the savings in tax and NI, but no (Free money to them and better cash flow for them)

So I paid £3 K to the HMRC. instead.

Trelleborg Offshore UK - You are a bunch of erm highly sensible people who follow the rules to the letter. And good on you. Not

[Broomsticklady]

Just been made redundant and took an early pension. I was able to put the excess over 30K into my pension pot, and then take 25% of the new pension pot tax free, which meant I got a slightly bigger pension and the tax man didn't get his paws on the excess to 30K - might help?

[Eric Mc]

The £30,000 is not AUTOMATICALLY tax free. If anyone receives an amount such as this the details of the payment have to be very carefully described by the employer to ensure they fall into the category that is tax free i.e. it must be an "ex-gratia" payment and not an integral part of any expected redundancy settlement.

This is a very complex area and even large employers do not always get this right.

Edited by Eric Mc on Saturday 18th June 12:13

[xamas1969]

@Ray

Check also whether the 4weeks includes benefits or are only basic pay. And also whether includes statuatory of that is on top of the four weeks. In other redundancy rounds in other companies they offered 4weeks per year to start with but it was a kind of voluntary from inland revenue point of view (i.e. fully taxable) whilst the ones who stayed until the end got 2weeks (with first 30k tax free).

GX