July 23rd, 2010 
Emily Young 
If a P45 lands on your desk, it pays to know how to make any severance package tax-efficient, says Emma Simon in The Daily Telegraph.
“As a rule, don’t agree or disagree with the initial departure terms offered.” Ask for a written proposal so you have time to consider what you want.
The first £30,000 of any payment is tax-free. If you are a higher-rate taxpayer, try to make sure this is paid after you receive your P45 and not before: this way anything over £30,000 will be taxed at just 20% and you will have a further year to pay any tax owed. Also consider asking for part of your payment to be made directly into your pension. Since it will not attract national insurance, you may be able to negotiate a better deal.
Don’t forget “two other potentially very valuable reliefs”, said The Schmidt Report. I
Tags: Pay