Redundancy payment is actually a technical term and the calculation of it is under statutory control. However, you may wish to pay more than the statutory amount, and there's nothing to stop you.
Rob Graham
Because they are "connected persons".
And for many of the rules on taxation, what you are allowed to pay a connected person is no more than you would be allowed to pay yourself.
And why do you think the IDS affair (which didn't involve any redundancy payments) got investigated at all?
Because everbody including the tories loathed and despised IDS ?
quote from the IR :
"Mrs X is entitled to statutory redunadancy pay which I have estimated to be £A (based on her previous year's salary - computation enclosed) which is an allowable deduction .... However I cannot see that there is any commercial reason for the payment of the remaining £Y"
So the IR is trying to say that all that can be paid is SRP.
Would we all agree that they are being perchance a trifle economic with the truth?
A client a couple of years ago made people redundant that had worked for them for no more than one full year - and paid them thirteen times the rate of SRP (3 months v 1 week) ... and some of them would have had zero SRP I suspect. So how was that a "commercial reason" ?
ian
And if the amount paid isn't more that one would be paid oneself?
ian
Bitstring , from the wonderful person Ian Diddams said
'This is being done for reasons of good corporate citizenship, and goodwill in the community'. We likewise can't see any commercial reason why IR staff get an index linked final salary related pension, however that doesn't seem to stop you paying it.'
That depends to some extent on how economical you are being with it. I don't mean to imply that you are lying, but you may be missing out relevant facts.
Provided there is no connection between the director(s) and those being made redundant, and no realistic likelihood of them being taken on again, then there doesn't need to be.
Once you get into connected persons, then you have to show that it isn't just a means of diverting funds to avoid tax.
I would still say you should be able to pay more than SRP, but you may have to justify it if it is a lot more.
I didn't say "would pay yourself". I said "would be allowed to pay yourself".
Do you know how much the IR would allow you to pay yourself in redundancy pay?
can I even make myself redundant?
ian
You could have a vasectomy.
Yes, but it does tend to get much more scrutiny than a "normal" redundancy would, and the IR will be out to prove that it is a sham.
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