BT Leaver and Redundancy payments
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Many thanks! You really are a star.
I'm comparatively simple BTRSS so far less complex to work out the remainder of £160k after payments made in the current and past three years. So relieved to have it confirmed that the payments are classed as Employer - that was certainly the impression I got from trawling dozens of web sites and taking the most common (so many conflicting statements from so called professional finance sites!!).
Yes, intend to set year one payments to cover the estimated PILON element and tax free.
once again, thankyou.0 -
OhToBeFree wrote: »Many thanks! You really are a star.
I'm comparatively simple BTRSS so far less complex to work out the remainder of £160k after payments made in the current and past three years. So relieved to have it confirmed that the payments are classed as Employer - that was certainly the impression I got from trawling dozens of web sites and taking the most common (so many conflicting statements from so called professional finance sites!!).
Yes, intend to set year one payments to cover the estimated PILON element and tax free.
once again, thankyou.
Yes if you are in a defined contribution scheme like the BTRSS and have made your contributions direct from salary under smart pensions it's relatively straight forward to see how much of your annual allowance is used each year. Just add your contributions and BT's.
Through smart pensions that money is taken off your gross pay and therefore doesn't go onto your P60 as earnings.
Good luck getting the package if it's what you want. I've got my fingers crossed at the moment for an offer.0 -
There is an early leaver package that's been offered to some at the moment. Here's my understanding of how it's paid.
You can spread the payment over 3 tax years 2018-19, 2019-20 and 2020-21. You can also pay an amount into the BTRSS and that means you pay the money in gross and no Income Tax or NI is due. (Remember the BTPS closes on 30 June so it's now not possible to pay this into your AVC and BT are not allowing it to be paid into the Special aditional Contribution arrangement). Only £30K is tax free. The rest has always been taxable at your marginal rate and people usually choose to do one or both of the above to avoid paying higher rates of income tax which would probably occur if you took it all in the current tax year.
There is a new fly in the ointment though. From April 2018 there is a PILON (payment in lieu of notice). This is where both Income Tax and National Insurance are due. The amount it's due on will depend on the individual - your salary and the amount of notice your contract says BT has to give you. BT gives you a calculator to work out what the deemed PILON is.
Any amount in excess of the PILON still gets the £30K tax free.
If I've understood it rightly the PILON will all come out of your first year's payment.
So what was relatively straight forward has just gotten a lot more complicated.
Here's my understanding of how I think it will work. Although the FAQ's BT gave us were not very clear. It's a new thing so lots of confusion about it.
Example of a leaver package worth £100K (nice round number)
Deemed PILON - £20K
Year 1 - £50K taken. £20K (PILON) will attract both tax at the marginal rate and NI. £30K will be tax and NI free
Year 2 - £25K taken - will be taxable at marginal rate. No NI is paid.
Year 3 - £25K taken - will be taxable at marginal rate. No NI is paid.
If you were to pay the year 1 £20K into a pension will that remove the tax and NI payments?
It is a sly move to not allow the payments to the SACs - more so and this has no impact on BT - just a tax advantage then taking the lump sum.0 -
tigerspill wrote: »If you were to pay the year 1 £20K into a pension will that remove the tax and NI payments?
It is a sly move to not allow the payments to the SACs - more so and this has no impact on BT - just a tax advantage then taking the lump sum.
My understanding is that the PILON rule was sneaked into the 2016 budget to come into effect on 6 April 2018.
The tax and NI on whatever the deemed PILON is has got to be paid to HMRC. It doesn't matter how you move the money around the tax and NI is due. The impact will vary. For me it's quite steep as I am on a grandfathered contract where BT would have to give me 6 month's notice if they wanted to end my contract. The more recent contracts don't tend to have as long a notice period so the impact isn't as bad.
I don't know why you can't increase your fund by putting it into the special additional contribution. But you can put money into the BTRSS. As you say that should not in theory make any difference to BT so I expect there must be some kind of technical /legal reason for this ?0 -
My understanding is that the PILON rule was sneaked into the 2016 budget to come into effect on 6 April 2018.
The tax and NI on whatever the deemed PILON is has got to be paid to HMRC. It doesn't matter how you move the money around the tax and NI is due. The impact will vary. For me it's quite steep as I am on a grandfathered contract where BT would have to give me 6 month's notice if they wanted to end my contract. The more recent contracts don't tend to have as long a notice period so the impact isn't as bad.
I don't know why you can't increase your fund by putting it into the special additional contribution. But you can put money into the BTRSS. As you say that should not in theory make any difference to BT so I expect there must be some kind of technical /legal reason for this ?
Thanks. I also have 6 months notice grandfathered0 -
tigerspill wrote: »Thanks. I also have 6 months notice grandfathered
Yep. I hadn't even realised I had a 6 month notice period. Sod's law what appeared to be something potentially advantageous has turned out to be the opposite. Still it's not enough to make the whole thing a deal breaker by any means. I now have my fingers crossed for a favourable decision from BT. I've tried my hardest not to be indispensable ! I hope they agree.0 -
Yep. I hadn't even realised I had a 6 month notice period. Sod's law what appeared to be something potentially advantageous has turned out to be the opposite. Still it's not enough to make the whole thing a deal breaker by any means. I now have my fingers crossed for a favourable decision from BT. I've tried my hardest not to be indispensable ! I hope they agree.
I think while BT need to give us 6 months notice, we only have to give them 3 months.
I haven't got the email yet
Hopefully our area soon. 0 -
tigerspill wrote: »I think while BT need to give us 6 months notice, we only have to give them 3 months.
I haven't got the email yet Hopefully our area soon.
Yes I believe that's right. I asked recently what notice I would have to give them and HR told me 3 months.
Hopefully your chance will come. I've just got everything crossed they accept me because if I get turned down I've no idea when or even if there will be a second chance. And to be perfectly honest it would be difficult to pick myself up and go back to work as normal.0 -
Just out of interest, can anyone post what the current BT leaver package is (number of weeks etc)0
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The latest one which came out in my part of BT a couple of weeks ago didn't have that information in the e mail inviting those qualifying to apply. There was a link and each person received a personalised quotation.camelopardis wrote: »Just out of interest, can anyone post what the current BT leaver package is (number of weeks etc)0
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