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Redundancy Package

 
#1 Redundancy Package
01/05/2009 23:16

anon

Hi All,

I understand the redundancy package is tax free upto £30K. Assuming if I get another job or a contract paying similar salary immediately after finishing (voluntary redundancy) with my current employer, will £30K still remain tax free. Can HMRC ask for tax on this £30K in near future on the basis above or any other basis?

your genuine response will be highly appreciated.

regds

Anon

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#2 RE: Redundancy Package
02/05/2009 10:32

Anon66 to anon (#1)

Might be worth checking with an employer/employment lawyer, but I am pretty sure that your current employer would legally not be allowed to take you back on just after they made you redundant. Therefore, I suspect that the enhanced redundancy pay would be taxed and they might get a slap on the wrist. Anyone else know?

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#3 RE: Redundancy Package
02/05/2009 10:52

anon to Anon66 (#2)

No, the another job which I mentioned is not with the same employer. it is with different employer.

gents please let me know your further views.

regds

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#4 RE: Redundancy Package
02/05/2009 11:00

jj to anon (#3)

Yes it is tax free.

However best not to mention it to your employer until the money is in the bank. They can reduce the amount they pay if you already have another job.

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#5 RE: Redundancy Package
02/05/2009 11:43

anon to jj (#4)

No, they can't.

I have taken voluntary redundancy on the basis of an x amount will be paid to me. It forms a contract between me and my employer and should they play nasty I can drag them to court and ask for multi million in compensation for breaching the contract.

cheers

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#6 RE: Redundancy Package
02/05/2009 15:44

Evil Consultant to anon (#5)

Actually, the £30k tax-free issue is slightly more complicated than that. You'd be very well advised to take advice from an expert as it will depend heavily on payment in lieu of notice, gardening leave and other such clauses in your employment contract.

The main point that the HMRC won't suddenly demand more tax if you start another job immediately is, I believe, correct.

EC

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#7 RE: Redundancy Package
02/05/2009 15:48

Corporate Lawyer to anon (#5)

I'd check the contract. Most (i.e. any agreement drawn up by a legal professional in the last 20 years or so) redundancy payments are written as "up to a maximum" of x weeks' pay, or until the ex-employee finds new employment. If employment is at a lower wage rate, then the employee can keep the difference in pay levels. Otherwise, they are liable to repay the excess redundancy payment. Because redundancy payments hold a special tax status, the old employer gets informed (for tax purposes) of the date when the ex-employee becomes re-employed. I can't imagine any firm that has been in such a poor position that they needed to make redundancies would delay a moment in chasing overpayments.

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#8 RE: Redundancy Package
02/05/2009 17:40

anon to Corporate Lawyer (#7)

Guys,

to be more specific, I am asking as a current Accenture employee who has taken Voluntary Redundancy during this round and also have got a job to start immediately after I finish with Accenture.

Please let me know your views as per above.

Regards

Anon

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#9 RE: Redundancy Package
03/05/2009 09:57

Russell to anon (#8)

no issue - keep the 30k and good luck in the new job.

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#10 RE: Redundancy Package
03/05/2009 20:45

well to Russell (#9)

been there done that got the t-shirt, and no issues with HMRC.

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#11 RE: Redundancy Package
05/05/2009 12:27

Anonimator to well (#10)

Me too. I left Accenture and started somewhere else before I got my payout.

Keep it the 30K is yours !

However, Make sure you get a new 'statement of earnings' from Accenture to give to your new employer so any tax you have paid over the 30k is factored into your 2009/2010 tax allowance.

If not you may find yourself getting a tax bill next year.

Just ask your new employers HR department.

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#12 RE: Redundancy Package
08/06/2009 14:10

Anon70 to anon (#1)

Hi,

I fear most of you guys got it wrong. The 30k tax free is only related to compensation for damages caused by unfair dismissal or breach of contract. Statutory redundancy pay and/ or pay in lieu of notice is taxable! Quite difficult subject and depends a lot on phrasing in your employment contract. However, if you have received additional pay because they did not stick to formal dismissal/ redundancy processes, this portion is tax-free. Bonuses are taxable, if they are only paid as a goodwill.

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#13 RE: Redundancy Package
08/06/2009 14:17

jj to Anon70 (#12)

Pay in lieu of notice is only taxable if a contract of employment gives you pay in lieu of notice as a contractual right.

In most employment contracts this is not specifically given as a right. Therefore when your employer offers say 3 months pay to leave immediately then this is generally tax free up to 30K.

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#14 RE: Redundancy Package
08/06/2009 16:21

anon to jj (#13)

anon70 is incorrect.

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