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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4428
Experience:  FCCA FCMA CGMA ACIS
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I am looking for some advice on redundancy and trying to

Resolved Question:

Good afternoon, I am looking for some advice on redundancy and trying to understand the principle around topping up my pension contribution
Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: My company has offered my 20K redundancy (so I understand this is tax free) - then I have 6 months notice period (notice in lieu) which is circa 70K - and wondering what I could do to minimise tax and maximise my pension contribution
Assistant: Is there anything else the Accountant should be aware of?
Customer: No this is all
Submitted: 3 months ago.
Category: Tax
Expert:  bigduckontax replied 3 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

The first 30K of a redundancy payment is tax free as you surmised.

The maximum pension contribution, including those made by your employer, is 40K this tax year. You could ask your employer to pay your salary in two parts, in 17/18 and 18/19, as your notice period will effectively span two tax years. This would expose your exposure considerably, particularly if you can manage pension contributions also.

I do hope tghat you have found my reply of some assistance. Please don't hesitate to follow up on this thresd if you wish.

Customer: replied 3 months ago.
Splitting the pay into the next financial year is not a bad idea. Thanks. What about the option of coming up with a salary sacrifice agreement - (and given that I have spoken to my pension company) who confirm that the carry forward allowances in previous years would give me plenty scope to cover the notice period salary payment.
Expert:  bigduckontax replied 3 months ago.

Now that is useful; if you have prior year contribution levels to mop up by all means reduce your take home pay by contributing.

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Expert:  bigduckontax replied 3 months ago.

Thank you for your support.