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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Good Morning, if I receive £35,000 as a settlement from

Resolved Question:

Good Morning,
if I receive £35,000 as a settlement from my employer to leave, how much of that is taxable?
My salary is £33k.
Also, if I retire and receive £26k lump sum how much of that is taxable. I have read a bit about limits under the new system with a possible advantage to splitting it over 2 years.
I look forward to hearing from you.
Stephen
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

If you were to receive £35,000 as a severance package, the redundacy payment of up to £30,000 would be tax free and the rest would be taxable as income at your normal tax rates.
More information on this can be found here
http://uk.practicallaw.com/6-382-8283

If you were to receive a lump sum payment of £26,000 out of your pension pot and provided this amount is no more than 25% of the fund value then this amount would be tax free.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

At this stage the £26k would be all of the lump sum so could I split it or what is the tax on that?

Also, if I sold my only house and kept the cash approx only £70k in total how would that be worked out please?

thank you

Steve

Expert:  taxadvisor.uk replied 2 years ago.
Stephen, thank you for your reply.

There would be no tax payable on this £26,000 if it is the lump sum payment out of your pension fund. There is no need to split it as it would be tax free.

If you wished to take any part of the remaining 75% of the pension fund then part part would be deemed income and you would pay tax at your normal rate, i.e. if you are a basic rate taxpayer the the rate is 20%.

If you sold your house the gain on it would be tax free as it is your only house and I presume you live in it as your main residence.

I hope this is helpful.
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Hallo again

I tried to click on the rating for "good service" and got "Access Denied" to that page. How do I sort that out?

Steve

Expert:  taxadvisor.uk replied 2 years ago.
Stephen, thank you for your reply and rating.

I have been credited for the service..

Best wishes.

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