A house of cards - help

Twopints

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IGNORE THIS BIT, CROSS-POSTED, NOT RELEVANT.

Hi there. Can you clarify - are you saying that your company is making you redundant and paying you a tax-free redundancy sum, but then they are offering you a job on lower salary AS WELL? If so, they are not making you redundant - this will have implications for the "redundancy" pay. I think you cannot work again for the same company for a fixed period or you have to pay the tax. This sounds fairly dodgy to me (by your company I mean).

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Also, on your pay for this year to date you will have paid some tax at 40%. If you are out of work for any period of time you may be entitled to a tax rebate. If you move to a job at a lower salary this will probably be refunded via your tax code, otherwise you should claim it back.

Another also - are you owed any holiday ? Can you get that paid as well ?

I'm not a tax/ redundancy expert but I have been made redundant so this is based on what I was advised then.

Good luck - get all you can !

Squiffy

:mad:

What is going on?

Just walked past my dept head on the stairs. He was on the phone talking to somebody about paying this "special bonus" in order to get me into the job at £45k.

But we've already agreed I can have redundancy and PILON from 1st July!

donsaini

just a quick note squiffy.

would it not be better to accept the redundancy + start job @£45k. you can still look around for something more suitable. at least then still cash coming in

sounds as if your boss is trying hard to keep you, knows you're a good worker. might be asking for a one off bonus to top up your salary to the differnce between redundancy and pilon.

@£45k, still be about £2.5k / month.

Squiffy

It is OK. PILON has been agreed.

So what do I do now?

I have mortgage of £1456 pcm, debt payments of £1100 pcm and living expenses on top.

Do I write to all my creditors asking them to freeze payment? Do I make an offer of settlement with the cash I will get?

Do I wait till I find a new job?

Just not sure what to do.

JAMIEDODGER

hi squiffy! have you posted all your outgoings so can see what exactly needs to be paid etc? living expenses and the debts....have you done martins budget planner?

Squiffy

I have done the budget planner, but there isn't much point posting up the results now. Before I was made redundant we were OK - meeting all payments every month and reducing the debt.

But now I'm redundant I have no monthly income. So do I just keep on paying the debt as I was until the cash runs out - hoping I get a job before that happens. Or do I tell the credit companies I have no income, offer reduced payments and ask for interest to be frozen?

Or do I do something else?

Malestrom

I think its unrealistic to think that your creditors will settle for less than 50% of the amount owed, and this would be all of your redundancy money gone and would leave nothing left to live on. Personally, I would advise you to write to each one, state that you've been made redundant and ask them to freeze your accounts until you are in employment again and able to continue making payments. You could offer to make token payments on each account of say £10pm.

Obviously you need to continue to pay the mortgage, council tax, utilities and living expenses and these will need to be drawn from your redundancy money until you find further employment.

Its worth posting your budget planner as we can normally advise you of areas where you can save money, which is now especially important given your current situation.

Lopo

Thinking out of the box slightly, redundancy has its plus points. 11/25k, is handy to quash a lot of the more serious debts in one swift move. Keep looking for another job now, regardless, even if you survive this wave of redundancies by accepting the other role, there usually follows another wave, and they could just be using you to do the same job.

Depending on the company you work for, if you have a option scheme (even a sharesave perhaps?) that you have been paying into,....the option to buy may well be released to you without the usual tax implications because of the redundancy forcing you to leave the scheme(s) early. You could then perhaps use the funds to buy shares at the option price and then sell immediately assuming it all works out. Of course you would need to factor in the tax implication of the sale element then too.... all depends on what sums your dealing with at the end of the day.

Regarding Sky, are freetoview/free-to-air cards no longer available? I think the Sky+ unit will still allow you to record one channel while watching a pre-recorded item, the recording functionality sky enable is for the ability to record a 2nd channel. Could be wrong. BUT if you do manage to obtain a freeview card for the sky+ box, you'll get your ceebeebies and loads more channels than a freeview set-top box would offer plus the PVR abilities too! )

Can you make things....then ebay sell them? some mysterious hobby that you have that perhaps would benefit others in some moneyspinning untapped format!?

Any income protection insurance? PPI on credit cards or other loan covers while redundant?

Are there any older smaller pension plans from previous companies that you have worked for that contain smaller sums of money. Perhaps have been meaning to do something with but never got around to doing so, perhaps cash these in ?

Any family who could perhaps bung you a 0% loan to chip of a large chunk of the debt?

Just a thought, but as you clear chunks of your debts, the ability to aquire new lower APR products will increase also, so perhaps you can happily take a back seat lowered paid job easier than you think as your income and debts will be more manageable....

If I were you, I would negotiate harder with your employer as it seems they did want your abilities.... take the 25k PILON and offer your services for around £30-35K, you benefit from the tax free lump that way and still have regular income. £40k+ is too high considering you admit your skillset is becoming outdated. Suggest to your employer that to find a replacement, they will probably have associated hiring and finding fees with agencies and the like, just pay you since you have the experience in-house already. It will keep you ticking over until you find another role elsewhere. Use them the way they intend to use you, after all they are doing away with you now.

What was/is the reason for redundancies by the way, and how many people in total have lost their positions?

Be certain that they pay you any holiday that would have been accrued to date, perhaps even push it for the extra 3 months notice period duration that would have accrued too!!

Hope my ramblings have given you some thought!

Good luck! Lopo

Squiffy

Depending on the company you work for, if you have a option scheme (even a sharesave perhaps?) that you have been paying into

I do. It has already been paid into for the maximum amount for the year I took it out. My original £1500ish investment at current rates should be worth £7kish in three years.

Regarding Sky, are freetoview/free-to-air cards no longer available?

Yes, you can buy them from Sky for £20. Not sure how the Sky+ will work though.

Can you make things....then ebay sell them? some mysterious hobby that you have that perhaps would benefit others in some moneyspinning untapped format!?

I have zero artistic / craft ability unfortunately. I am selling lots of old computer games, DVDs, etc. Made £125 so far.

Any income protection insurance?

None I'm afraid

Are there any older smaller pension plans from previous companies that you have worked for that contain smaller sums of money. Perhaps have been meaning to do something with but never got around to doing so, perhaps cash these in ?

Can I do this? I do have two old pension funds, both of which are worth relatively little. How would I go about cashing them in? What would the tax implications be?

Any family who could perhaps bung you a 0% loan to chip of a large chunk of the debt?

Potentially. We are going to manage as best we could and only ask family if house ever becomes at risk. Which as long as we deal fairly with our creditors should never occur - I hope!

If I were you, I would negotiate harder with your employer as it seems they did want your abilities....

I've already had advice from certain quarters to apply as an external candidate once my PILON goes through.... :cool:

What was/is the reason for redundancies by the way, and how many people in total have lost their positions?

Myself and two colleagues doing the same job have had our roles made redundant. (One has got external employment, the other found an internal job). The positions were made redundant because organisational changes saw our responsibilities move elsewhere. It is actually a quite genuine reason for the redundancy.

Be certain that they pay you any holiday that would have been accrued to date, perhaps even push it for the extra 3 months notice period duration that would have accrued too!!

They are at the very least paying my outstanding holiday up to 30/6. I didn't think of asking that it be paid up to the middle of September! I'll do this tomorrow! Excellent tip - thanks - should be worth an extra 6.5 days salary tax free!

Hope my ramblings have given you some thought!

They did - many thanks. :T

Lopo

By the sounds of things, a £1500 limit would imply you have what is known as a "direct share buying scheme or Employee share plan", they have many differing other names too names but function the same.

Basically it means sums are deducted upto the maximum of £1500 per year from your monthly wage before tax and NI are deducted – so you end up paying about £900 roughly for what is worth £1500 through tax savings alone - knowing of course that you a higher rate tax payer for the above example figures. Its a great scheme, giving you an effective discount of up to 41% of the market price at the time of purchase.

You can take your shares out at any time, but, in order to benefit from all the tax/NI advantages, they must normally be left in trust for five years. After five years the shares are free of income tax and NI, and you will not have to pay capital gains tax on any increase in value while the shares are in trust.

The divedends of the shares if taken as dividend shares (rather than cash which gets taxed) can be held for 3 years before they can be sold tax/NI free.

Depends on where you say you are, but to be worth around 7k 3 years from know means they must be damn good shares for an initial £900 hit!

Special circumstances normally apply: If you leave employment for any of the
following reasons, you will not have to pay income tax or NI on the value of your shares: medical retirement, redundancy, the sale or transfer out of the company or part of the business by which you are employed, death, retirement on or after retirement age (retirement age for purposes of directshare is 50).

Which means, do some checking and find out what your shares are worth today!!!! Could be worth more present day than carrying the debt charges long term. Of course, you need to check out how exactly your scheme works and there are no other clauses in effect.... Knocking 5.5k of your debt now is possibly worth more saving in interest charges alone than a maybe(?) value worth 7k in the future....find out.

Sharesave schemes are totally different, you save/set money asside to then buy the share 3/5 years down the road assuming the option price offered at the start/joining of the scheme are cheaper than the "then future" present day value, you will make a profit immediately. The plus point in the redundancy situation your in is that you can excersise the option to buy those shares now and not have to wait (if it works out £££ of course!!). Could well be money in the bank if you have this scheme available to you too that your not quite aware of...

Cancel sky, save the money, and order the free 2 view card, you'll get more channels than a regular freeview box, and I'm about 85% certain you can still record usiong the PVR function of the sky+ box, but only record 1 channel. Again, find out!

The pension thing, you will have to look into your individual plans yourself I'm afraid, dont know too much about the tax aspects of releasing early. Perhaps if the amounts are so small, you will probably be okay. But ideally you need to establish this yourself before doing anything, and to weigh up the possible tax hit against offsetting future debt interest charges.

How did you do with the additional 3 months virtual holidays pay !?

Its tricky stuff what I've thrown in the air and suggested, but could play and pay to your advantage if executed correctly. Wise up on what financial products you have got where and how everything all works. Its always your final decison though so tread carefully with what you decide to do.

I think I think out of the box too much and should get back in it!

Good luck, I think your doing very well so far....but dont get comfortable, still a long way to go.

Lopo