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Ask for a tax-free golden handshake if you're made redundant

Answered by
22 March 2007 [0 comments]

Q: 

If you're made redundant, your employer may suggest that you continue working for a time in the hope that you'll find another job before you leave.

A: 

But if you leave straight away with a golden handshake as compensation for loss of office, you and your employer gain financially.

You pay no income tax or National Insurance Contributions on the first £30,000 of your redundancy pay. There are two exceptions to this rule:

If your employment contract gives you an automatic right to the payment, you lose the tax and NI exemptions.

If the redundancy agreement with your employer includes a clause preventing you from setting up a rival business, again you lose the benefits.

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