Redundancy Payout

Wintermoon

Just after some advice please.

My husband has one child (with whom he has no contact with) which the CSA take money for straight out of his wages every month via DEO order.

My husband may be made redundant from the Army in June as he is on the list.

If he is (which is probable as he is going to volunteer) he will be paid a lump tax free sum of £80k and he can also start claiming his army pension straight away (he will be having a couple of months off work once made redundant before either starting up his own business or be employed by someone else).

Can the CSA claim money from his tax free lump sum and if so how much? Will he have to tell the CSA that he is being made redundant and will they automatically take money from his pension via the same DEO order or will he have to arrange this himself? (he is on the CS2).

He would like to be prepared now rather than having to pay the CSA a large sum of backdated money later on.

Many thanks for your advice.

kevin137

Yes the Pension as taxable income is assessable i believe. So that would need to be declared, not so sure about the redundancy, there are circumstances where it is taken into account and some where it can be ignored.. Not too sure but tax free is not an earning, but as it is over £65,000 then it is an asset which is assessable....

Worth asking them by phone anonymously maybe...??? Or waiting for someone with slightly more knowledge on here...

Prelude knows his stuff here, he could give a more accurate anser to this i think...

Trying_to_be_good

The redundancy lump sum is 'capital' not income, as is any pension lump sum, so not taken into account for CSA. The income from his pension is taken into account, but not sure if the current order for deductions will continue or needs to be sorted out again.

Best wishes for the transition to civilian life.

notanewuser

How will he be managing £80k tax free? Is some of that pension lump sum? Usually only the first £30k of any redundancy payment is tax free.

Wintermoon

Many thanks for your replies.

Yes the lump sum is part of his pension lump sum and redundancy.

He was due to retire in three years (after doing 22 years) so he will get a larger lump sum due to the redunancy.

I also thought it was the first £30k but he has been on the MOD calculator and its worked out at £80k plus £10k resettlement and he says it will be tax free.

kevin137

Either way it will be capital in excess of £65,000 so is assessable and if it is spent in a way that could be seen as avoidance there could be some penalties for that.

All i am saying is make sure you get the right advice before you decide how best to deal with it as diversion of assets is not something i would want the CSA chasing me for...

So phone and or take legal advise on this to protect yourself...!!!

Wintermoon

Thank you.

I shall phone the CSA anonymously first and see what they have to say. I think he is a member or was a member of NACSA so hopefully they may be able to give legal advice on the lump sum issue.

I just dont want the CSA hounding him!

kevin137

That is definitely the best option