Severance Pay Waiver

Payment into AVC from severance pay

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A client has provided me with a letter from his former employer showing the following: "Severance Pay Waiver" 'You chose to use £15,000 of your severance pay to improve your retirement benefits. The funds have been applied as follows: Tax free cash £15,000'

Can anyone advise as to how this should be treated on his tax return? Is it a contribution to his pension paid gross? He is a higher rate tax payer and total income for the year is about £120,000!

The information seems ambiguous to me but perhaps I am missing something.

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By Accountant A
26th Oct 2016 16:07

What kind of pension scheme is it? Does he have capacity in his annual allowance/lifetime allowance for an additional £15,000 contribution?

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By SteveRA
26th Oct 2016 16:32

BBC AVC scheme and yes, he ha the spare capacity within the annual and lifetime allowances. (BBC as in the broadcaster)

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By Accountant A
26th Oct 2016 17:04

In which case I would say it doesn't need to go on his ITR. He has had tax relief to the extent that the gross payment has been made to his employer's scheme.

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