Need help calculating tax and NI on pay in lieu of notice

[OvertiredandConfused]

I'm being made redundant, which is fine. I've negotiated a good settlement which will be tax free under a settlement agreement.

Additionally, I get two months pay in lieu of notice and 6.5 days holiday pay. This does have to be taxed, which is also fine. However, I don't seem to be able to work out how much I'll actually be paying in tax.

Effectively, I'm getting three months pay in one go - final month worked plus two months in lieu of notice plus holiday pay. I also have to deduct a season ticket loan. Does that come from net or gross salary? I'm guessing net.

I'm a higher rate (not additional rate) tax payer.

Can anyone help?

tools.hmrc.gov.uk/hmrctaxcalculator/screen/Personal+Tax+Calculator/en-GB/summary?user=guest
If you use the hmrc calculator it will work it out for you. Use the detailed calculation and choose the "pay period" option. The date will be when you are getting your final pay packet.

I think (based on what happened to DH when he got made redundant)
You will pay tax at your top rate of tax on everything additional that you get in the month (so 40% on the lot, plus NI).
Also I think if the total taxable income you've earned in the tax year then goes over the £150k band prorated (so for example, if it was in June, this is £150/12x3 = £37.5k) then you would pay the additional rate on that part. Then you would get that back either by starting a new job or by filling in a tax return.

And season ticket loan would usually be from net pay

Why do you ned to work it out? It will simply go through the payroll system and nobody here would be able to work it out for you. You may then get a tax rebate at some stage depending on what you are going on to earn.

Thanks imsorry and ceeveebee. I'll dig out my P60 and try that link but what ceeveebee said is what I expected.

Rather surprised you can't see why I'd want to know Redhat. I'm trying to plan and budget as best I can looking ahead as I don't have a job lined up and I expect it will take me a while to get one.

But you can plan and budget - you're getting two months of your normal net salary (give or take a few pounds depending on what the payroll system does).

Just ask your employer to run the figures and tell you. They can do that. We put exact figures in settlement agreements sometimes (I'm an employment lawyer).

Won't it be as per x weeks of net pay currently. Depending what you do for the rest of the financial year you may be able to reclaim overpaid tax next April, if by not working or taking a lower paid job you fall into a lower tax bracket overall. Presumably you'll need to come to an arrangement regarding the balance of STL. I don't think you have to pay it as lump sum but can do so for the remaining term as you would have from salary. Will you be cashing it in?

As an employment lawyer I'm sure you know that if you get 2 months salary in 1 month, it will be quite a bit less than 2 months salary paid over 2 months? Personal allowance and 20% tax band can only be used once, so will be around £900 extra tax which you won't get back until next job/tax return and if you go into the additional rate band it will be a bit more. Perfectly normal to want to know the net figures.

Yes, exactly. I'll be getting 3 months in one go which will be about £1900 more in tax than if it was paid across 3 months. That's the equivalent to one month's fixed outgoings for me so, if I do take longer to find a job, it makes a big difference. I know I'll potentially get it back in the next tax year, but that's after my redundancy money will have run out!