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Hi. Can you confirm what the nature of the £30,000 lump sum is please. Is it a commutation of pension or a severance/compensation payment? How much will you earn in the current tax year by 9 September, £7,500 (half a year's salary?)
I neglected to mention that the MARS payment of approx £15.000
under current legislation is allowed to be paid without the deduction of tax and national insurance.
The lump sum of approx £30,000 is part of my NHS pension package together with an annual sum of approx £5,000 pension. (This is based loosely on predicted figures I have previously received before the MARS came out)
My State pension will be approx £6,370.
I will have have been paid approx £7,500 half a years salary by the end of September. Hope this makes it clearer.
Thanks.The MARS payment of £15,000 will be tax free as you say. The £30,000 pension commutation payment will also be tax free under current tax legislation. I'm assuming that your NHS pension of £5,000 per annum will be less than it otherwise would have been had you chosen not to commute some of it for the lump sum of £30,000.Your taxable income for 2013/14,the current tax year will be about £13,185 (£7,500 6 months salary + £3,185 state pension (6 months assuming it hasn't started yet) + £2,500 6 months NHS pension). You are nowhere near having to pay 40% tax. After you deduct the personal allowance of £9,440, you will have net taxable income for 2013/14 of £3,745. Even if the MARS payment was taxable, you would not pay 40% tax as you need an income in excess of £41,450 pre-personal allowance to have to pay tax at that rate.I hope this helps but let me know if you have any further questions.
Many thanks, XXXXX XXXXX will help me to make a more informed decision if I am accepted for the MARS scheme. It is a weight off my mind. I am very pleased with the help you have given me.