Redundancy is a difficult period for employees due to the uncertainty. However, redundancy can also bring new opportunities. Working out what to do with your redundancy package can be overwhelming.
Redundancies often come with a cash lump sum. Depending on your age when you are made redundant, you might use the redundancy package as part of your retirement plan or you may be looking to return to work.
At Four Wealth Management, we can help you feel more confident about the future with our expert financial advice and guidance during this difficult period. An adviser can help you to work out the most tax-efficient ways to use your redundancy pay.
Find out more about redundancy options
The importance of Financial Advice during redundancy
When your employment status is uncertain, financial advice can be invaluable when it comes to making the most of redundancy pay and creating a financial plan to help prevent redundancy from leaving you in a negative financial position.
Book a no-obligation meeting to discuss your redundancy package
Are redundancy payments tax-free?
The first £30,000 of a redundancy payment is tax-free and no National Insurance is deducted either. It is important to double check that National Insurance was not deducted from your payment by mistake. The remaining amount will be taxed at your normal tax rate. However, if you receive the amount after you have left the company then you will be taxed at 20% and then have to complete an annual tax return.
What happens to unused holiday allowance if I am made redundant?
Any unpaid wages, bonuses, overtime or holiday allowance will be treated in the same way as your normal wages. These will have tax and National Insurance contributions deducted even if you receive the payment after your employment has ended.
Negotiate your redundancy package
If your role offered you life insurance, medical cover or other guarantees then you could ask your employer if you could retain these benefits as part of your redundancy package until the normal renewal date. This will not cost your employer anymore to keep the policy in place until it runs out and could provide you with valuable support as you might not get a new role immediately which would mean you were unprotected in terms of insurance cover.
Review your redundancy options
At Four Wealth Management your financial adviser will work with you to determine your goals. It is important to consider all of your options and not rush any decisions.
Book a no-obligation meeting now to discuss your redundancy package
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
