Do I, Don't I?

The_Saver_2

I'm more fortunate than others in that I've been offered voluntary redundancy in 2012 and have until the end of the year to decide whether or not to take it.
I've read some really great threads on here (in particular by AndyBoy) and the comments on there, together with Martin's detailed info on redundancy, benefits, budgeting etc have been extremely valuable.
The bottom line remains though - should I take redundancy or not?

I plan to put all the helpful info on here together and work through the various aspects of redundancy to try and make an informed decision - taking into account what my head says and what my heart wants.

My first step is pulling together all the figures and, for the first time in my life, filling in a budget planner to see where all my money currently goes and how much I will actually need to live on if I decide to take the plunge......

The_Saver_2

I've had a look at all the paperwork and the main figures are as follows:-

Redundancy Pay = 1 year's salary
(Redundancy Pay + my normal wage up to 31 Mar 12 would take me over the £35k threshold so I need to check whether I would have a tax bill for the amount falling into the 40% tax bracket).

With careful budgeting, my redundancy pay would last me at least 18 months - possibly up to 21 months if I cut out extras such as birthday/Christmas presents. (I have include in my calculations, receiving contributions-based JSA for 6 months).

My plan is to cut right back on expenditure in October (to late for September as I already have financial commitments) to see how I manage. Much as I hate my current job, I have never had to particularly watch the pennies and so I need to know if I can cope on a very strict budget. If it goes well then I intend to take Martin's advice and start putting as much money as I can into a savings account from October, ready for when I finish my job (if I decide to accept the redundancy).

In readiness for this, my next plan is to work out what will fall due in the next few months and see if there is anyway I can plan ahead and reduce the costs.

Another thing I need to explore is, if I do resign, what will I do next? I don't have the luxury of being able to give up work completely so I intend checking out job sites to see what type of jobs are currently being advertised and whether there are any skills that I have that I need to brush up on, or maybe courses I can take etc to improve my employability.

getmore4less

Redundancy payment is tax free up to £30k

40% tax starts at £42475

LL30

I'm just doing sums at the moment and for benefits purposes, they take savings over £16K into account (lower for some benefits too) so I don't think you'd get JSA x

The_Saver_2

getmore4less wrote: »

Redundancy payment is tax free up to £30k

40% tax starts at £42475

Getmore4less - I'm not sure if I've got mixed up but I took the £35k threshold from the HMRC website.

Income Tax rates and taxable bands

Income Tax rates and taxable bandsRate

Starting rate for savings: 10%*
2009-10 £0-£2,440
2010-11 £0-£2,440
2011-12 £0-£2,560

Basic rate: 20%
2009-10 £0-£37,400
2010-11 £0-£37,400
2011-12 £0-£35,000

Higher rate: 40%
2009-2010 Over £37,400
2010 - 2011£37,401-£150,000
2011 - 2012 £35,001-£150,000

The_Saver_2

LL30 wrote: »

I'm just doing sums at the moment and for benefits purposes, they take savings over £16K into account (lower for some benefits too) so I don't think you'd get JSA x

Hi LL30

Many thanks for your post. From what I've read about benefits etc I agree with you. I won't be entitled to income-based JSA but I should be entitled to contributions-based JSA.

My understanding is that I'd get contributions-based JSA for a maximum of 6 months (£62.25pw?) as I've paid National Insce for over 2 years.

The_Saver_2

One thing I hadn't considered is that I might have to pay extra CSA payments to my ex out of my Redundancy Pay.

I will need to look into this fully but a document I quicky read suggests that only statutory redndancy pay doesn't attract extra CSA payments. My employer would be paying me well above the statutory level so I need to look into how much of my redundancy pay I would need to give my ex.

LittleVoice

The_Saver wrote: »

Hi LL30

Many thanks for your post. From what I've read about benefits etc I agree with you. I won't be entitled to income-based JSA but I should be entitled to contributions-based JSA.

My understanding is that I'd get contributions-based JSA for a maximum of 6 months (£62.25pw?) as I've paid National Insce for over 2 years.

You are right about the contribution-based JSA being payable for up to six months whatever your savings.

agrinnall

The_Saver wrote: »

Getmore4less - I'm not sure if I've got mixed up but I took the £35k threshold from the HMRC website.

Income Tax rates and taxable bands

Income Tax rates and taxable bandsRate

Starting rate for savings: 10%*
2009-10 £0-£2,440
2010-11 £0-£2,440
2011-12 £0-£2,560

Basic rate: 20%
2009-10 £0-£37,400
2010-11 £0-£37,400
2011-12 £0-£35,000

Higher rate: 40%
2009-2010 Over £37,400
2010 - 2011£37,401-£150,000
2011 - 2012 £35,001-£150,000

You haven't taken into account your personal allowance (a common mistake on these boards when questions are asked about higher rate tax so don't feel bad about it), so you can earn the basic rate amount plus your personal allowance before paying 40% on anything else. So for this year if your allowance is the standard £7475 you can earn £35,400 + £7,475 = £42,475 (as gm4l said).

The_Saver_2

I feel as though I might be losing my way a little. Maybe its because I've still got another 4 mths to decide whether to take the redundancy package and a further 3 mths after that before I would leave.

However, I've done all my figures (except for the CSA angle on the red pay - still looking into this) and I know where I would stand financially (Thanks to GetMore4less and Agrinnall for the info on higher rate tax). I now need to wait out til October to see how I cope for a month sticking to a very tight budget.

In the meantime, and to carry on with the momentum, I'm looking at courses I could do between now and December (preferably, free of charge) to improve my skill set. I'm also looking at voluntary organisations to see what I could do to keep me occupied if it takes me a while to find a job. The latter probably sounds a little premature but I'm far better at planning ahead and making decisions in good time rather than being in a situation and having to think on my feet. Planning ahead allows me to view several options in a considered fashion. When I'm already in the situation, I have historically made panic decisions that aren't well-thought out and frequently are the wrong choice.

With regard to future financial commitments, I've made some tiny progress with that. I've got some big birthdays coming up: 18, 21 and several 40ths. Clintons have got a special offer on at the moment where you can get 3 cards for 99p each compared with their usual price of £2.79 each. I have to say the majority of the cards aren't particularly to my taste but, luckily, 3 were so I can benefit from the savings. (Check first that none of the cashback sites give you cashback as well - I forgot to do this! Doh!).

SlopingBird

The_Saver wrote: »

Hi LL30

Many thanks for your post. From what I've read about benefits etc I agree with you. I won't be entitled to income-based JSA but I should be entitled to contributions-based JSA.

My understanding is that I'd get contributions-based JSA for a maximum of 6 months (£62.25pw?) as I've paid National Insce for over 2 years.

Hi The Saver

You'll definitely get contributions-based JSA for six months - they don't ask for any details of savings or partner's income.

I was in exactly the same position as you in January. I hated my job so much that I'd almost walked out in November with nothing. Fortunately, after a week's leave I managed to force myself back and I applied for and was granted voluntary redundancy earlier this year.

Like you I need to work. We have a large mortgage (but small house) and my partner isn't well-paid. I'm well-qualified (first class degree, post-grad) but I've been unable to get any type of job so far. My initial plans, i.e. cut back, look for more rewarding work, freelance, etc, now seem incredibly optimistic as there is hardly anything to apply for. My professional job website has advertised about six jobs in the whole of Wales since I've been unemployed (the latest is the opposite end of the country and one was in Bristol!).

I suppose what I'm saying is think really carefully before you take the leap. You may live in a part of the UK where jobs aren't so scarce but even the lowest paid jobs are attracting huge numbers of applicants. The Jobcentre staff haven't put any pressure on me at all to get a job - they don't even search their system when I sign on.

We can probably survive financially for another six-nine months but already I'm lying in bed worrying about what will happen if I'm still unemployed then. No JSA from December (I won't qualify for income-based) and little likelihood of selling a house that is now worth a lot less than we paid for it four and a half years ago. Just trying not to panic most of the time!

Anyway, good luck whatever your decision. I'm the first to admit how miserable it is spending five days a week in a job you hate.