Not paying tax on a lump sum from redundancy.... how?

[Dupont666]

Im due a lump sum and have been told if i put the extra (above the threshold) in my pension i wont be taxed on it.

Now the question is what if i dont want to pay it into my pension, is there anything i can invest in something else (ISA, Premium bonds, etc) so i dont need to pay tax on it, or is it just pensions.

Im not trying to do something illegal, i just want my money to work for me a little better than lose a large % to the government that i wont see again, cause im not allowed to claim benefits, etc...

[Soovy]

Dupont666 said:

Im due a lump sum and have been told if i put the extra (above the threshold) in my pension i wont be taxed on it.

Now the question is what if i dont want to pay it into my pension, is there anything i can invest in something else (ISA, Premium bonds, etc) so i dont need to pay tax on it, or is it just pensions.

Im not trying to do something illegal, i just want my money to work for me a little better than lose a large % to the government that i wont see again, cause im not allowed to claim benefits, etc...

First £30k is tax free. Pay it into your pension and it's tax free. Other than that, taxed at PAYE.

[Dupont666]

Soovy said:

Dupont666 said:

Im due a lump sum and have been told if i put the extra (above the threshold) in my pension i wont be taxed on it.

Now the question is what if i dont want to pay it into my pension, is there anything i can invest in something else (ISA, Premium bonds, etc) so i dont need to pay tax on it, or is it just pensions.

Im not trying to do something illegal, i just want my money to work for me a little better than lose a large % to the government that i wont see again, cause im not allowed to claim benefits, etc...

First £30k is tax free. Pay it into your pension and it's tax free. Other than that, taxed at PAYE.

so anything above the limit should be placed into my pension for it to be worth it?

[JP_Midget]

Dupont666 said:

Soovy said:

Dupont666 said:

Im due a lump sum and have been told if i put the extra (above the threshold) in my pension i wont be taxed on it.

Now the question is what if i dont want to pay it into my pension, is there anything i can invest in something else (ISA, Premium bonds, etc) so i dont need to pay tax on it, or is it just pensions.

Im not trying to do something illegal, i just want my money to work for me a little better than lose a large % to the government that i wont see again, cause im not allowed to claim benefits, etc...

First £30k is tax free. Pay it into your pension and it's tax free. Other than that, taxed at PAYE.

so anything above the limit should be placed into my pension for it to be worth it?

But, you can split it into two tax years (I think there's a limit to two), so take 30k before april, and 30k after and they are both below the limit.

[Dupont666]

JP_Midget said:

Dupont666 said:

Soovy said:

Dupont666 said:

Im due a lump sum and have been told if i put the extra (above the threshold) in my pension i wont be taxed on it.

Now the question is what if i dont want to pay it into my pension, is there anything i can invest in something else (ISA, Premium bonds, etc) so i dont need to pay tax on it, or is it just pensions.

Im not trying to do something illegal, i just want my money to work for me a little better than lose a large % to the government that i wont see again, cause im not allowed to claim benefits, etc...

First £30k is tax free. Pay it into your pension and it's tax free. Other than that, taxed at PAYE.

so anything above the limit should be placed into my pension for it to be worth it?

But, you can split it into two tax years (I think there's a limit to two), so take 30k before april, and 30k after and they are both below the limit.

How do i do that?

Is it possible?

[JP_Midget]

It was possible when I last looked into it, I'm not sure whether your employer has the ultimate say in whether they will do it for you or not.

Edited to add;
http://www.worksmart.org.uk/money/how_much_tax_do_...

site says said:

If you have to pay tax, it counts against your tax bill in the year you receive the money, not the year you were made redundant. If it is paid in instalments, then the £30,000 exemption can be carried forward.

Kind of suggests that there isn't a limit on the number of installments your previous employer makes, but you're hoping they continue in business; particularly if your deal is better than the statutary minimum.

Edited by JP_Midget on Wednesday 19th November 16:37

[Dupont666]

JP_Midget said:

It was possible when I last looked into it, I'm not sure whether your employer has the ultimate say in whether they will do it for you or not.

Edited to add;
http://www.worksmart.org.uk/money/how_much_tax_do_...

site says said:

If you have to pay tax, it counts against your tax bill in the year you receive the money, not the year you were made redundant. If it is paid in instalments, then the £30,000 exemption can be carried forward.

Kind of suggests that there isn't a limit on the number of installments your previous employer makes, but you're hoping they continue in business; particularly if your deal is better than the statutary minimum.

Edited by JP_Midget on Wednesday 19th November 16:37

its a large bank and they are not going anywhere at the moment so i guess i can get my lawyer to ask them

[Eric Mc]

Soovy said:

Dupont666 said:

Im due a lump sum and have been told if i put the extra (above the threshold) in my pension i wont be taxed on it.

Now the question is what if i dont want to pay it into my pension, is there anything i can invest in something else (ISA, Premium bonds, etc) so i dont need to pay tax on it, or is it just pensions.

Im not trying to do something illegal, i just want my money to work for me a little better than lose a large % to the government that i wont see again, cause im not allowed to claim benefits, etc...

First £30k is tax free. Pay it into your pension and it's tax free. Other than that, taxed at PAYE.

Only if it's an ex-gratioa payment i.e. it isn't "wages" for work done.

[Dupont666]

Eric Mc said:

Soovy said:

Dupont666 said:

Im due a lump sum and have been told if i put the extra (above the threshold) in my pension i wont be taxed on it.

Now the question is what if i dont want to pay it into my pension, is there anything i can invest in something else (ISA, Premium bonds, etc) so i dont need to pay tax on it, or is it just pensions.

Im not trying to do something illegal, i just want my money to work for me a little better than lose a large % to the government that i wont see again, cause im not allowed to claim benefits, etc...

First £30k is tax free. Pay it into your pension and it's tax free. Other than that, taxed at PAYE.

Only if it's an ex-gratioa payment i.e. it isn't "wages" for work done.

does it make a difference that most of it is the payout and 5k is in words of the compromise agreement.

'a payment in lieu of consultation equivilent of 30 days salary less and paye deductions'

but on asking that can be put straight into a pension and get past the PAYE deductions.

so does that mean i can default that til the next tax year along with the extra above the 30k pay out?

[Eric Mc]

You need to talk to an employment tax specialist.

The whole area of redundancy/compensation payments/payments in lieu of notice etc is fraught with complexities and tax ambiguities.