Redundancy pay

Redundancy pay

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I act for a company who is ceasing to trade. There is one part time employee around 15 hours/wk and the director and his partner (wife) who is also an employee. How much redundancy is it for the part timer? - I guessed at around 1 weeks pay for each year of service. She has been employed for > 2 years.

I could trawl through the employment law to find out, but just wondered if anyone has looked into this recently and knows off hand. I assume he will be entitled (and his partner) to the £30,000 golden handshake - I believe they meet all the conditions.

Anyone got any comments/ideas
robert woolley

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By AnonymousUser
17th Jun 2008 14:09

Pros and cons
There is an argument that this is not an ex gratia payment since they own the company and I have seen HMRC take the point. If the amount creates a lot of arguments the professional fees might outweigh the tax saving and you may settle for PAYE at 40% (plus NIC) after all.

Deciding to take the money as a distribution in a striking off should attract tax at 18% or even 10%.

You take a choice between 0-52% for PAYE and NIC or 10-18% for CGT.

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By User deleted
16th Jun 2008 17:20

Why do they need redundancy?
All the circumstances , which are not given, need to be considered, but generally, as the owner of the company is entitled to all the money in the company anyway, why should he be paid redundancy? This is not an arm's length commercial transaction. What is he going to do after the company ceases? Retire? What is his age? Or continue working as an employee for someone else?

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By kevin9
16th Jun 2008 17:20

£30000 PILONs
My limited understanding is that if a PILON is not specified in the terms of an employment contract or implied from the contract of service then the PILON is not subject to tax.

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By User deleted
16th Jun 2008 16:09

Ex-gratia
I would also be interested in anybody that could advise on the technicalities of issuing an ex-gratia payment in a husband/wife co

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By Euan MacLennan
16th Jun 2008 15:39

Statutory redundancy pay
You can work out statutory redundancy pay using the calculator on the BERR website.

Ex gratia termination payments are a different ball game.

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