Redundancy Payments and Tax Treatment

stamboy

Hi,

I might have to make an employee redundant but wanted to know how I could do it the most tax efficient way without my company paying tax or NI on it or my employee.

I know you can have upto 30k tax free but have to meet certain criteria. Also the employee isn't that well paid and whilst I won't be giving them 30k (as they've only been here 2 years) I do want to give them 10k.

Am I able to do this without the company or the individual paying NI or tax?

Thanks in anticipation

SomeBozo

Its a tricky area.

If the number of of employees you are making is redundant is a small % of the workforce, then you are normally allowed to offset the redundancy payments against tax as a business expense. But trust me, its a minefield.

Depending on the size of the business, and the number of employees being made redundant, I would suggets professional advice.

For the employee, they won't pay any tax on any redundancy payment if its under 30k.

Bozo

stamboy

SomeBozo wrote: »

Its a tricky area.

If the number of of employees you are making is redundant is a small % of the workforce, then you are normally allowed to offset the redundancy payments against tax as a business expense. But trust me, its a minefield.

Depending on the size of the business, and the number of employees being made redundant, I would suggets professional advice.

For the employee, they won't pay any tax on any redundancy payment if its under 30k.

Bozo

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