Redundancy & Compensation

Redundancy & Compensation

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Can a controlling director of a small Ltd Co pay himself redundancy and compensation (not above £30k) on the cessation of the company?

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AJJ

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By ajj.jones
18th Mar 2007 21:55

yes.....
yes.. other employees of the company were paid redundancy and compensation at cessation - I was less worried about those payments because they are obviosly non controlling employees

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By nick farrow
17th Mar 2007 19:29

probably statutory redundancy would be allowable which may well not work out as very much if he has been on low salary

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By billgilcom
18th Mar 2007 10:33

Redundancy
Yes I agree that statutory redundancy would fall within the legislation for a tax deduction on the company but anything over that could hardly be said to be wholly and exclusively incurred for the purposes of the trade as it is ceasing and therefore cannot be incurred for the purposes of enabling the company to continue and earn its profits.

There is also the possibility that anything above that could be viewed as taxable on director as remuneration/income distribution/capital distribution........ also did any other employee get statutory redundancy?

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By lorraine.hickson.bennettb
19th Mar 2007 09:29

Depends if director is also selling shares.....
If the director is a shareholder and is selling his shares on ceasing work then (if his share holding is able to exert influence over the amount he receives as a lump sum and that for his shares), it is likely that the the Inland Revenue will attempt to argue that the 'lump sum on termination' does not qualify for the section 403 exemption. The Revenue will seek to treat it as a distribution by the company or part of the sale proceeds.

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