Advice on higher tax rate when starting new job?

[Jilko]

Hi everyone,

I wonder if anyone can help.
I am being made redundant this summer and my redundancy payment plus 4 months salary til July will take me over into the higher rate tax band for that year.
I'm a bit confused as to what will happen when I eventually get another job, which I plan to do within a month or so of leaving. Would this mean I would automatically start paying 40% tax when starting a new job on all my wages ?? Seems a bit harsh.

Thanks

Think so unfortunately.

Harsh, but those who make the rules would just see it as that you got however much over the year, they won't care if it was from a lump sum redundancy payment or monthly salary.

You do know though that the first 30K of a redundancy payment is tax free? So it doesn't count towards your taxable income, if that would make a difference.

As mumsta2lydia said the first £30k of your redundancy pay is tax free. So, if you have already earned enough in the 2010/11 tax year to pay the higher rate of tax (excluding first £30k of redundancy payment) then you will continue to pay the higher rate - earnings and allowances are calculated cumulatively when being paid through a PAYE system.