Tax, investments and pension rules can change over time so the information below may not be current. This article was correct at the time of publishing.

How to maximise your redundancy payout

Covid-19 has impacted everyone. Businesses have been hit hard after many were forced to close for months at a time. One impact of this has been the increase in redundancies. In September 2020, the UK unemployment
rate peaked to its highest level in 4 years. There were 314,000 redundancies reported1.

The uncertainty caused by redundancies has highlighted the importance of having a financial plan in place and has shown that flexibility is essential when it comes to financial planning in case your plans do need to change.

A financial adviser at Four Wealth Management can help you to create a financial plan using your redundancy
payout to help give you greater security and peace of mind after losing your job. The sooner you start planning, the more options and flexibility that you will have.

Book a no-obligation meeting

How much redundancy pay am I entitled to?

If you have worked for your employer for at least two years then you are entitled to statutory redundancy pay, the exact amount depends on your age, weekly pay and number of years in the job.

Many employers provide a redundancy package which is more generous than statutory pay and is usually paid in a lump sum.

Find out more about redundancy payments

What should I do with my redundancy payout?

Redundancy is a stressful time for employees due to the uncertainty. However, receiving a good redundancy package can lighten the blow. There are many options that you can consider when it comes to making the most of your payout.

Is redundancy pay free from tax?

The first £30,000 of a redundancy payout is free from tax and National Insurance.

At Four Wealth Management, a Financial Adviser can help you to determine the most tax-efficient way for you to receive the remaining payout. For example, if you receive the income after getting your P45 your tax band may decrease.

Make sure redundancy doesn’t leave you in a negative financial position

For many people, when being made redundant they should focus on short term financial priorities first. You do not know how long you will be unemployed for and therefore it is important that you have all of your essential bills covered for several months.

If your redundancy package is significant, you can then start thinking about longer term goals and how to make your money work harder for you. This usually involves maximising the tax-efficiency of your investments.

Pay your redundancy pay directly into your pension

One option a financial adviser can discuss with you is asking your employer to pay part of your redundancy package directly into your pension. You will then benefit from tax relief on the contribution. 

Book a time to discuss this

Should I take Financial Advice when being made redundant?

Redundancy can be a major life event with lots of difficult decisions needing to be made. Financial advice can be invaluable in helping you to understand your options fully and determine which is right for you.

It can also help you to maximise your redundancy package by utilising tax reliefs.

A Financial Adviser at Four Wealth Management can help you to create a financial plan for the future to help you feel more confident when facing the unknown.

Redundancy can bring opportunities you hadn’t considered before such as retiring early.

For advice on maximising your redundancy pay, book a no-obligation meeting with a Financial Adviser at Four Wealth Management online or call 0117 973 0500. 

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

 1 Labour market overview, UK: November 2020, Office for National Statistics

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If you have any queries or would like to arrange a face to face meeting with an adviser for a no obligation review of your personal finances, simply book a call back using the form below. Alternatively, you can call us on 0117 973 0500.

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How to maximise your redundancy payout
FourWealth Management