Should I take lump sum?
Discussion
Hi,
My employer is changing my contract and as a result is offering a lump sum (just over £9k before tax) to change contracts.
I have a choice to take it in one lump sum or spread out the money over a period of 24 months in equal installments paid into my wages.
Approximate new wage will be around £30k before tax, excluding lump sum installments.
What would be the best option to take financially?
Thanks in advance
My employer is changing my contract and as a result is offering a lump sum (just over £9k before tax) to change contracts.
I have a choice to take it in one lump sum or spread out the money over a period of 24 months in equal installments paid into my wages.
Approximate new wage will be around £30k before tax, excluding lump sum installments.
What would be the best option to take financially?
Thanks in advance
NickCQ said:
What are the changes to the contract? I think you have to approach the offer with suspicion and plan to negotiate...
This. It depends what value is being eroded by the contract changes (and their value to you), their value over time (i.e. if it's a reduction in pension contributions then you will probably need some specialist advice) vs. £9k. I suspect that if £9k is the offer then there is significant value over a long term period that will be removed from your remuneration package. Thanks for all the replies. I was just looking at it from a tax prospective i.e. which way would I pay less tax.
Regards to job losses, I would be pretty much safe (I hope) as I have been here 8 plus years and would not probably be chosen if it came to redundancy.
Many staff have been here for less than 2 years and would, unfortunately, probably go before me. Especially as we would all now be on the same money. This is where the £9k is coming from as we are being paid this to sign new contracts.
Thanks everyone.
Regards to job losses, I would be pretty much safe (I hope) as I have been here 8 plus years and would not probably be chosen if it came to redundancy.
Many staff have been here for less than 2 years and would, unfortunately, probably go before me. Especially as we would all now be on the same money. This is where the £9k is coming from as we are being paid this to sign new contracts.
Thanks everyone.
With regards to not signing the contract our Union has been fighting this and it doesn't seem likely that the company is going to budge. My employer have offered 3 options. Sign the contact and take the lump sum.
Sign the contract and take the lump sum over a period of 24 equal monthly installments into your monthly pay.
They have offered Voluntary Severance whereby you can take a lump sum to leave. This sum is determined by the your length of service and 3 months pay added to this total.
I would like to remain working here. There is no claw back clause. If I take the lump sum in one hit and leave I would not have to pay it back. Likewise if I take it in installments and decide to leave in 1 year I would still be entitled to the remaining amount outstanding so there is no risk either way.
Thank you for your reply.
Sign the contract and take the lump sum over a period of 24 equal monthly installments into your monthly pay.
They have offered Voluntary Severance whereby you can take a lump sum to leave. This sum is determined by the your length of service and 3 months pay added to this total.
I would like to remain working here. There is no claw back clause. If I take the lump sum in one hit and leave I would not have to pay it back. Likewise if I take it in installments and decide to leave in 1 year I would still be entitled to the remaining amount outstanding so there is no risk either way.
Thank you for your reply.
There's another very good reason for taking it in one go - if it's added to your ongoing wage you'll just spend your way through it from month to month. With a lump sum you at least have the possibility of putting it aside and looking after it. My suggestion would be invest in a stocks & shares ISA.
companies are doing this a lot. Mine did it last year when they altered our pensions and we got about 5.5k after tax etc, I've bankedit and it's going towards reducing my mortgate when it renews next year.
They're scrapping our existing T&Cs again now but with no payout, a classic case of fire and rehire.
They're scrapping our existing T&Cs again now but with no payout, a classic case of fire and rehire.
ironv8 said:
companies are doing this a lot. Mine did it last year when they altered our pensions and we got about 5.5k after tax etc, I've bankedit and it's going towards reducing my mortgate when it renews next year.
They're scrapping our existing T&Cs again now but with no payout, a classic case of fire and rehire.
This is what I'm thinking of doing. Take the money and pay it towards the mortgage when it renews. They're scrapping our existing T&Cs again now but with no payout, a classic case of fire and rehire.
Stay in Bed Instead said:
You will pay less NI if you take it in one payment.
Your income tax will be the same.
This is correct. In addition consider that the time value of money means that is is better to have £9k today than £9k spread evenly over 24 months.Your income tax will be the same.
Just don't spend it all at once
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