Making someone redundant

[aceparts]

As per the title. What are the rules around payments? Is it tax free completely? Are there any minimum/maximum amounts that can be paid?

Thanks

[Eric Mc]

Holiday Pay - tax and NI able
Pay in lieu of notice (PILON) - tax and NI able
Statutory Redundancy - tax and NI free
Compensation for loss of office - tax and NI free
Ex-Gratia payments up to a limit of £30,000 - tax and NI free

[LC23]

Eric Mc said:

Holiday Pay - tax and NI able
Pay in lieu of notice (PILON) - tax and NI able
Statutory Redundancy - tax and NI free
Compensation for loss of office - tax and NI free
Ex-Gratia payments up to a limit of £30,000 - tax and NI free

It's not that simple. For example PILON can be paid tax/NIC free if no contractual entitlement. If you are putting together a compromise agreement for someone then it needs to be looked at by a lawyer and accountant to make sure you cover both the legal and tax/NIC aspects. You can also go to HMRC for clearance on how you are treating the payment/s.

[Eric Mc]

LC23 said:

Eric Mc said:

Holiday Pay - tax and NI able
Pay in lieu of notice (PILON) - tax and NI able
Statutory Redundancy - tax and NI free
Compensation for loss of office - tax and NI free
Ex-Gratia payments up to a limit of £30,000 - tax and NI free

It's not that simple.

Of course not. We are dealing with the UK tax system here, after all .

I just wanted to lay out the basics for the OP.

The whole "final payment to leaving staff" is a bit of a minefield.

There was another thread on this topic not too many weeks ago.

Edited by Eric Mc on Monday 19th April 17:47

[SystemParanoia]

cant you just relocate the business and change your numbers over the wkend ?

no awkward moments
no having to console or deal with upset staff... umm ex staff.

everyones happy

[LC23]

Eric Mc said:

LC23 said:

Eric Mc said:

Holiday Pay - tax and NI able
Pay in lieu of notice (PILON) - tax and NI able
Statutory Redundancy - tax and NI free
Compensation for loss of office - tax and NI free
Ex-Gratia payments up to a limit of £30,000 - tax and NI free

It's not that simple.

Of course not. We are dealing with the UK tax system here, after all .

I just wanted to lay out the basics for the OP.

The whole "final payment to leaving staff" is a bit of a minefield.

There was another thread on this topic not too many weeks ago.

Edited by Eric Mc on Monday 19th April 17:47

Sorry, should have remembered HMRC and "simple" is an oxymoron.

It is a particularly nasty area of tax and I have seen many a client try to unravel things a year or two down the line where HMRC carry out a PAYE audit and advice/clearance was not sought at the time.