Redundancy pay for Director
Dave is the only director and shareholder of a limited company and is likely to retire in a year or two. He says he will be entitled to redundancy pay at that time from the company. Is he entitled under regulations to claim in these circumstances?
If so then if the normal route of a small salary and larger dividends is followed, any redundancy would be small as it is based upon wages. Redundancy is calculated on the wages of the last 12 weeks and so could any salary be substantially increased for the last 3-4 months to increase any claim?
Is a contract of employment required and if so would this need to be amended to allow for the above increase in salary? Should the contract make any reference to redundancy?
Finally, can the company make an additional redundancy payment to Dave at the time it gives him his redundancy notice?
Dave thinks he is on to a winner, but can readers provide any helpful comments/guidance?
Pensioner.
Curious
I am also curious. I remember, many years ago, a potential client told me that he 'moved around' his wifes, and family members, companies, and claimed redundancy pay each time he swapped employment. I think he said he was a Director, too (but my memory may not be spot on).
No problem for me, I wasn't their accountant, but I would be interested in knowing whether this is acceptable.
More information (I'm curious)
Is 'Dave' the sole employee, or is the company going to continue under new directors/shareholders when he retires?
Is this about looking for tax-free approaches to taking £30K out of the business before it's wound up?
I can't help feeling HMRC will smell a rat.