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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4770
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I'm a civil servant in England with 28 years under my belt.

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I'm a civil servant in England with 28 years under my belt. I have been offered an 'exit' scheme. My gross salary is £38693 a year at £3224.42 per month gross and £2267.94 net. I'm on tax code 1060L. The deal is one months salary per year up to 21 months and the first £30k is tax free. The calculator provided by my organisation doesn't take into account tax deductions and gives a figure of £68k, I need an accurate 'net' figure, can you provide me with one and how much will it cost ?
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. I make your redundancy payment GBP 67712.82 of which as you say 30K is tax free leaving you with 37712.82 exposed to tax at your marginal rate. So your worst case scenario is a 40% charge of a tad over 15K. It all depends, of course when the redundancy takes effect. The PAYE system will throw a wobbler when the 37K odd hits it and will assume that you will receive 37K every month thereafter, an unlikely scenario. It will take months for it to correct itself as the next month's PAYE will be well over the employer's limit for refund and if you sign on then you will not get any rebate until the end of the tax year unless you are re-employed in the interim. I am sorry not to be able to be more accurate, but at this stage there are too many inponderables especially if you receive an immediate pension to boot. I have given you the worst possible case, but it could well be better than that. You could, of course, get relief by dumping the whole lot in a private pension scheme, but this may not be a realistic position for you. I do hope my reply has been of assistance.
Customer: replied 2 years ago.
Thanks B, yeah that pretty much what I thought but figured to confirm with someone who knew what the score was. The plan is to do the exits by March 2016 so within this tax year. At 47 I'm not old enough to retire yet.
First advice, don't forget to sign on as you receive NI credits for all the time you are on their books even if you do not get job seekers allowance. Welcome to your UB40 and the civil servants behind the armoured screens when you sign on fortnightly! Right, so let's recalculate. Your income will be 38693 + 37213 - 10600 = 65306. 31865 is taxed at 20% [6373] and the balance at 40% [13376] so your total tax bill for the year would be of the order of 19749 ie a tad under 20K. Please be so kind as to rate me before you leave the Just Answer site.
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