Tax Free Redundancy Payments

stamboy

Is there a statutory minimum term that somebody needs to be employed for before they can be paid redundancy?

I have an employee who has worked for a year for me whom I wish to make an ex-gratia redundancy payment without incurring any NI or taxes for him or the company. Is this possible or do I have to wait till he's been employed for a longer period, and if so how long is that period?

Thanks in anticipation

computerbar

to qualify for redundancy payment is two year of service
http://www.berr.gov.uk/whatwedo/employment/employment-legislation/employment-guidance/page15686.html#Who_can_qualify

Another link for calculation........
http://business.timesonline.co.uk/tol/business/career_and_jobs/article4224516.ece


FYI only (what are tax are due..)
http://www.hmrc.gov.uk/guidance/redundancy-factsheet.pdf
HTH

cash99

computerbar wrote: »

to qualify for redundancy payment is two year of service

The 2 year qualification is for entitlement to statutory redundancy. You can make ex gratia redundancy payments to staff who have been employed for any length of time and the usual tax rules apply.

If you pay ex gratia amounts you may be liable to pay them to others in the future as the payments could become custom and practice.

You need professional advice.