Redundancy Tax Free Sum And Re Employment

star88

Hi All

After being made redundant 3 months ago. There is now a vacancy within the same company but different department due to someone leaving.

What are the implications on the tax free sum if returning to the same company after 3 month? will the redundancy payment now be subject to income tax?

Thank you in advance for your advice

getmore4less

No, there is no time limit.

asajj

Some companies have their own policies though as it would make unhappy some employees to see someone is made redundant, received a sum of money only to come back to another job.

My previous company had a 3 months limit.

getmore4less

The 3 months is usualy there in company policies to avoid ET.

Layzee

As you are aware you get the first 30k of a redundancy payment taxfree, anything above and you will pay tax at your normal amount.
If you return to work after 3 months you will pay tax at the normal rate for whatever tax band you are in (20% or 40%) obviously any redundancy payment you received over 30k will be counted as income.

General_Grant

Layzee wrote: »

As you are aware you get the first 30k of a redundancy payment taxfree, anything above and you will pay tax at your normal amount.
If you return to work after 3 months you will pay tax at the normal rate for whatever tax band you are in (20% or 40%) obviously any redundancy payment you received over 30k will be counted as income.

I don't know that I fully understand what you are saying here.

Returning to the same employer even within a week would not affect the tax-free status of the first £30K.

I think you are saying that it is only any amount above that which would be counted as income for tax purposes. If that was included in the P45 issued by the employer three months prior, then obviously it will still be included in the PAYE calculations for the remainder of the tax year. If the redundancy pay was paid separately, then HMRC would still be aware if it were over £30K and would take it into account when calculating the total tax due for the year.

If there was any amount above £30K then the OP may even want to delay a return to ensure the next pay day is on or after 6 April this year. Whether this is advantageous depends on the amount of money involved, including any JSA received or other PAYE earnings in the meantime.

melloecastro

my company makes you repay it if you return to them within a six month period. you need to check their policy or ask HR?

Layzee

General_Grant wrote: »

I don't know that I fully understand what you are saying here.

Returning to the same employer even within a week would not affect the tax-free status of the first £30K.

I think you are saying that it is only any amount above that which would be counted as income for tax purposes. If that was included in the P45 issued by the employer three months prior, then obviously it will still be included in the PAYE calculations for the remainder of the tax year. If the redundancy pay was paid separately, then HMRC would still be aware if it were over £30K and would take it into account when calculating the total tax due for the year.

If there was any amount above £30K then the OP may even want to delay a return to ensure the next pay day is on or after 6 April this year. Whether this is advantageous depends on the amount of money involved, including any JSA received or other PAYE earnings in the meantime.

Yep that's pretty much what I was trying to say the 30k is yours no matter what as far as the Tax man is concerned(dependant on company policy) anything over the 30k will be taxable.

patman99

melloecastro wrote: »

my company makes you repay it if you return to them within a six month period. you need to check their policy or ask HR?

Not sure that is legal.
Such a rule would surely be in breach of your statutory rights ?.

asajj

patman99 wrote: »

Not sure that is legal.
Such a rule would surely be in breach of your statutory rights ?.

If someone is made redundant and paid a fat package to come back within 6 months of it - what would be other employees of the company thinking / feeling?

Kynthia

I think the public sector often has a rule about not returning or getting another public sector job within 6 months. You can end up needing to repay a portion of your redundancy pay otherwise.