Returning as contractor after redundancy.

Drumjitsu

 I would just like some advice on my situation please.

I am about to be made redundant from my position as a manager.  I have worked for the company for over 20 years so will be getting full statutory redundancy pay and 3 months PILON.  They have decided that they need to save costs and my role as a manager is no longer sustainable. 

I am quite happy with this as I was planning to retire within a year anyway.   However in addition to my management role  I have in previous roles developed various technical skills that are very useful to them and they have asked whether I would consider coming back and working as a contractor in a different role (just using my technical skills and not in a management position) to help them with a few projects. 

I do not want to jeopardise the status of my tax free redundancy payment or cause any issues with HMRC. so I would appreciate any advice on the best way to do this or whether it's better to just avoid it altogether.   
If I did it I would probably leave for at least a month before returning and without looking into it too deeply or having the fine details, I'm assuming I would probably be a PAYE contractor.

Thanks in advance.   

Grumpy_chap

Drumjitsu said:

 I would just like some advice on my situation please.

I am about to be made redundant from my position as a manager.  I have worked for the company for over 20 years so will be getting full statutory redundancy pay and 3 months PILON.  They have decided that they need to save costs and my role as a manager is no longer sustainable. 

I am quite happy with this as I was planning to retire within a year anyway.   However in addition to my management role  I have in previous roles developed various technical skills that are very useful to them and they have asked whether I would consider coming back and working as a contractor in a different role (just using my technical skills and not in a management position) to help them with a few projects. 

I do not want to jeopardise the status of my tax free redundancy payment or cause any issues with HMRC. so I would appreciate any advice on the best way to do this or whether it's better to just avoid it altogether.   
If I did it I would probably leave for at least a month before returning and without looking into it too deeply or having the fine details, I'm assuming I would probably be a PAYE contractor.

Thanks in advance.   

The redundancy will mean you cannot simply return as a PAYE contractor.

You would probably be best to establish your own Ltd Co. and then price work for specific projects so that it is clear you are operating with risk and not an effective employee.  It will probably be necessary to obtain Professional Indemnity insurance.

Drumjitsu

Thank you,  
TBH it’s probably not worth the bother of setting up a Ltd Co.  I was heading towards retirement anyway and don’t see myself wanting to work for more than 6 months or so.  Looks like I might as well just take the money and put my feet up. 

Brie

If your worth to the employer is significant they may be willing to delay the redundancy.  I've seen this happen elsewhere and the individual walks away several months later with a bit more ££ do to the increased length of service.   In fact they may agree to treat it as you trialing a new role that you both agree doesn't work out in a few months and then you go back to being made redundant. 

Eldi_Dos

@ Drumjitsu
 Would a umbrella company be the way to go for you, ask your company if they already use ones for any temporary staff they have ?
Could open up whole new horizons for you.

Andy_L

Grumpy_chap said:

Drumjitsu said:

 I would just like some advice on my situation please.

I am about to be made redundant from my position as a manager.  I have worked for the company for over 20 years so will be getting full statutory redundancy pay and 3 months PILON.  They have decided that they need to save costs and my role as a manager is no longer sustainable. 

I am quite happy with this as I was planning to retire within a year anyway.   However in addition to my management role  I have in previous roles developed various technical skills that are very useful to them and they have asked whether I would consider coming back and working as a contractor in a different role (just using my technical skills and not in a management position) to help them with a few projects. 

I do not want to jeopardise the status of my tax free redundancy payment or cause any issues with HMRC. so I would appreciate any advice on the best way to do this or whether it's better to just avoid it altogether.   
If I did it I would probably leave for at least a month before returning and without looking into it too deeply or having the fine details, I'm assuming I would probably be a PAYE contractor.

Thanks in advance.   

The redundancy will mean you cannot simply return as a PAYE contractor.

You would probably be best to establish your own Ltd Co. and then price work for specific projects so that it is clear you are operating with risk and not an effective employee.  It will probably be necessary to obtain Professional Indemnity insurance.

Isn't that an oxymoron anyway?
Your either PAYE & an employee
Or you're a contractor and sorting out your tax/NI yourself.

redped

Drumjitsu said:

Thank you,  
TBH it’s probably not worth the bother of setting up a Ltd Co.  I was heading towards retirement anyway and don’t see myself wanting to work for more than 6 months or so.  Looks like I might as well just take the money and put my feet up. 

It's not really that much bother.  I was in a similar position to you several years ago - I left my job because I'd had enough and wanted to give early retirement a go; a few months later, the company contacted me to see if I'd be interested in some part-time contract work, for a more interesting project I'd worked on a few years earlier.  Like you, I wasn't sure if it was worth the effort, but decided to give it a go.

I set up a Ltd. company, agreed a very nice daily rate, and I spent about 12 months working part-time for them.  Getting the insurance, filing the tax return, etc. wasn't difficult, and I was able to put the money straight into my SIPP, with no tax to be paid.

MyRealNameToo

Grumpy_chap said:

Drumjitsu said:

 I would just like some advice on my situation please.

I am about to be made redundant from my position as a manager.  I have worked for the company for over 20 years so will be getting full statutory redundancy pay and 3 months PILON.  They have decided that they need to save costs and my role as a manager is no longer sustainable. 

I am quite happy with this as I was planning to retire within a year anyway.   However in addition to my management role  I have in previous roles developed various technical skills that are very useful to them and they have asked whether I would consider coming back and working as a contractor in a different role (just using my technical skills and not in a management position) to help them with a few projects. 

I do not want to jeopardise the status of my tax free redundancy payment or cause any issues with HMRC. so I would appreciate any advice on the best way to do this or whether it's better to just avoid it altogether.   
If I did it I would probably leave for at least a month before returning and without looking into it too deeply or having the fine details, I'm assuming I would probably be a PAYE contractor.

Thanks in advance.   

The redundancy will mean you cannot simply return as a PAYE contractor.

You would probably be best to establish your own Ltd Co. and then price work for specific projects so that it is clear you are operating with risk and not an effective employee.  It will probably be necessary to obtain Professional Indemnity insurance.

You could be an employee of an umbrella company, which is the normal operating model for a contractor on an inside IR35 basis. 

Just remember when discussing/agreeing rates that all the employers costs come out of that rate as well as the employee deductions plus the umbrella's fees. Most have calculators that can tell you what take-home will be but several dont deal with things properly if the day rate means you will be going over £100k per year.

General_Grant

You could leave one day from your current role and collect your redundancy pay.

Allow at least one week between your final day in that role and begin another PAYE job with the same employer.  So no need to fuss around being a contractor and this is particularly so if the new role is a different job.  (Even if you were doing the same job, you could go back after the short break and not affect your redundancy situation.)  You do need to have that break in employment though - your new contractual documents must specify the new start date for your employment and must not show it is to count as continuous with previous work.

Drumjitsu

Thanks everyone,  I think I have a clearer picture now and the answers have given me plenty to think about.  I have decided to take a few months break after I finish and decide whether to do anything or not.  Fortunately I'm in a reasonable position financially so It would be more a matter of occupying myself than actually needing the money (although a bit more money is always welcome).  So maybe I should treat this as the kick I needed to finally move into retirement.