Getting made redundant, need tax advice.

[Stepgar]

Hi all, I unfortunately will be made redundant in October but will get a payout. . I have been told that the first 30k is tax free but then anything above that is taxed at normal rate 20%

 

My question is if I were t get a job fairly quickly what would be the tax implications on the first thirty?

 

Any help would be much appreciated.

[Glasgow_Saint]

1st 30k is tax free regardless

[Colinjb]

Surely you would just have to declare everything on a tax return and be taxed for annual wages of the total amount?

[Glasgow_Saint]

http://www.hmrc.gov.uk/employers/redundancy-er.htm

[Clapham Saint]

First 30k or a redundancy payment is tax free. The rest is taxed as normal income.

[Stepgar]

First 30k or a redundancy payment is tax free. The rest is taxed as normal income.

 

Yeah happy with this but someone said if get a new job quickly I will pay a shed load of tax. Sounded like they meant the first 30k was impacted. Maybe it's everything above the thirty that goes in to the total income figures for the rest of the tax year?

[EastleighSoulBoy]

Yeah happy with this but someone said if get a new job quickly I will pay a shed load of tax. Sounded like they meant the first 30k was impacted. Maybe it's everything above the thirty that goes in to the total income figures for the rest of the tax year?

 

My redundancy payment from Ford was not taxed as it was slightly less than £30k. I started my new job four days later and my tax for that year was normal i.e. as if I had not received the redundancy.

[Stepgar]

My redundancy payment from Ford was not taxed as it was slightly less than £30k. I started my new job four days later and my tax for that year was normal i.e. as if I had not received the redundancy.

 

Very interesting cheers for this.

[thefunkygibbons]

The tax position is as above

 

Someone is mixing this issue up with compensation rules, which in some cases of unfair dismissal mean that the amount can be reduced if a person gets a job quickly and therefore has mitigated their losses

 

However, this does not apply to redundancy as such compensation is a mixture of statutory and contractual entitlement

[St Chalet]

Yeah happy with this but someone said if get a new job quickly I will pay a shed load of tax. Sounded like they meant the first 30k was impacted. Maybe it's everything above the thirty that goes in to the total income figures for the rest of the tax year?

 

Whoever told you this is plain wrong. You get the first £30k tax free regardless of what else and when else you earn.

[Glasgow_Saint]

I understand the point you're making (i think)

 

 

you are owed say 55k from redundancy - 30k is tax free and 25 is taxable.

 

 

will the 25 affect your taxable allowance for the remaining of the year i. e knock you into 40%

[benjii]

I understand the point you're making (i think)

 

 

you are owed say 55k from redundancy - 30k is tax free and 25 is taxable.

 

 

will the 25 affect your taxable allowance for the remaining of the year i. e knock you into 40%

 

Yeah but so what? You only pay 40% on the excess above the tax threshold so there is no sense in waiting just for that reason.

[Depressed of Shirley]

You also need to watch out for Payment in Lieu of Notice (PILON). This is taxable, so be sure to check exactly how your redundancy terms are set out. It is basically where they have a contractual obligation to give you say six months notice, but basically get you to go sooner, but pay you a lump sum as if you have worked the full six months.

[Ken Tone]

You also need to watch out for Payment in Lieu of Notice (PILON). This is taxable, so be sure to check exactly how your redundancy terms are set out. It is basically where they have a contractual obligation to give you say six months notice, but basically get you to go sooner, but pay you a lump sum as if you have worked the full six months.

 

Exactly. You need to be careful and clear about what is formally a redundancy payment as such, and what is merely part of a package related to redundancy. It is only the first 30k of an official redundancy payment that is tax free... ie additional compensation for being made redundant, not payments in lieu of notice, or indeed any other contractual obligations that your employer is bound to make.

[trousers]

Random thought....

 

If I came to an arrangement with my employer such that they didn't pay me a salary but instead made me redundant every 6 months, with a redundancy package that happened to match my 6 months salary, and re-employed me straight away each time, could I avoid paying any income tax on my "earnings" forever?

 

Not that I'm advocating looking for loopholes in the taxation system of course...

[goneawol]

Random thought....

 

If I came to an arrangement with my employer such that they didn't pay me a salary but instead made me redundant every 6 months, with a redundancy package that happened to match my 6 months salary, and re-employed me straight away each time, could I avoid paying any income tax on my "earnings" forever?

 

Not that I'm advocating looking for loopholes in the taxation system of course...

 

Redundancy implies that the job is no longer available. If your employer re-employed you after making you redundant you could sue them for unfair dismissal

[Doctoroncall]

Redundancy implies that the job is no longer available. If your employer re-employed you after making you redundant you could sue them for unfair dismissal

 

...and even if you accepted a different job at the same company within a defined time period (usually 6 months), your redundancy payment will be void.

[Hatch]

back in 2005 I was made redundant.

 

left on the Friday, got a call on the Monday offering me a new job.

 

It made no difference to the first £30K tax free redundancy payment. Happy Days.

 

Good luck with finding something else.

[Whitey Grandad]

Redundancy implies that the job is no longer available. If your employer re-employed you after making you redundant you could sue them for unfair dismissal

 

It's the post that is redundant, not the person, and the procedure must be 'fair'. If the employer does not follow the correct procedure then the dismissal is automatically unfair. I believe it is possible for a company to make a post redundant and then re-employ the postholder on a short-term contract.

[tony13579]

I got 30k tax free on march 31st and the balance was deferred to the next tax year.

Also I payed £1500 into the employee share scheme march 31st. I was thrown out of that scheme on leaving and got the £1500 back tax free.

[Stepgar]

Thanks everyone for your input. Most helpful. Thanks for the wishes hopefully something will arise fairly swiftly