Mutually Agreed Release Payment

valio247

Hi,
I am currently full time employed in a fairly well paid job, 56 years old but I have been thinking about possible early retirement towards the end of 2012 for the past few months although my employer is not aware of this. Last week my employer approached me and made an offer of £25,000 to leave within the next few weeks as they are looking to reduce staffing over the next 18-24 months. I consider this a fairly generous offer but I will be attempting to negiotiate a slightly higher figure as I know that with my salary and pension contribution it currently costs my employer approx double this figure per annum to employ me.

My main question is - are these arrangements subject to the same tax rules as redundancy payments which I believe is taxable over £30,000. However I stress this is not an official redundancy more a mutual agreement between employer & employee so I have no idea if there any official rules relating to this type of arrangement.

Any type of advice or guidance will be welcomed, especially if there is anyone who has experienced a similar situation.

gibson123

If your job no longer exists it is a redundancy, it is a voluntary as opposed to a compulsory redundancy. Therefore all conditions are the same, it doesn't matter what your employer chooses to call it for all intents and purposes it is redundancy therefore redundancy terms and conditions apply.

Spirit_2

Are you a public sector worker?

These schemes arevery popular in the public sector right now. Where redundancy is unaffordable as terms and conditions too generous MARS may be offered , the work is not redundant but an agreement made to replace at for example a lower level. This is cost saving in the long run.

£25000 for something you were going to do anyway sounds quite good. Don't forget you are entitled to notice and any outstanding holiday pay.

Good luck