Effective Use of a Redundancy Payout

[devnull]

I've noticed a few of the older people I work with in my sector are slowly being moved out of the business via some reasonably large redundancy payouts, approaching 6 figures.

Seeing as I only really know that you are taxed on the first 30k of a redundancy package, what have others done with the rest of their funds? Most people i've talked to just seem to put it in their pension fund.

Granted it depends on your situation in life, but any examples of how to make good use of it? This is all on the basis that you are able to find another job reasonably quickly!

[V8mate]

devnull said:

Seeing as I only really know that you are taxed on the first 30k of a redundancy package, what have others done with the rest of their funds?

No. The first £30k is tax-free. Anything in excess is taxed.

[devnull]

V8mate said:

devnull said:

Seeing as I only really know that you are taxed on the first 30k of a redundancy package, what have others done with the rest of their funds?

No. The first £30k is tax-free. Anything in excess is taxed.

Sorry, i was typing without thinking - i meant tax free

[anonymous-user]

devnull said:

V8mate said:

devnull said:

Seeing as I only really know that you are taxed on the first 30k of a redundancy package, what have others done with the rest of their funds?

No. The first £30k is tax-free. Anything in excess is taxed.

Sorry, i was typing without thinking - i meant tax free

What rate are you taxed at after the 30k?

[V8mate]

yammyfan said:

devnull said:

V8mate said:

devnull said:

Seeing as I only really know that you are taxed on the first 30k of a redundancy package, what have others done with the rest of their funds?

No. The first £30k is tax-free. Anything in excess is taxed.

Sorry, i was typing without thinking - i meant tax free

What rate are you taxed at after the 30k?

Almost certainly 40% as, unless you're made redundant in the first week of April and the total package is less than the higher rate threshold, you'll be a higher rate taxpayer.

[Ozzie Osmond]

V8mate said:

Almost certainly 40% as, unless you're made redundant in the first week of April and the total package is less than the higher rate threshold, you'll be a higher rate taxpayer.

...which is precisely what makes it so attractive to stick the excess over £30k (and otherwise taxed at 40%) in your pension fund if you can.