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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
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I am a 53 yr old male. I was made redundant in April this year.

Resolved Question:

I am a 53 yr old male. I was made redundant in April this year. The company i worked for then offered me employment, through an agency. This i am happy to do. This started on 1st July 2008. i have been offered work up to end of Feb 2009, 8 months through the agency back with the company that made me redundant. Is there any restriction to the amount of time i can work for my previous employer, through an agency, after being made redundant from that employer, without it effecting the £30,000 tax free part of my redundancy payment.
Submitted: 5 years ago.
Category: Tax
Expert:  Ed Johnson replied 5 years ago.

Dear XXXXX,

 

Thank you for your question.

 

The tax treatment of your redundancy payments paid by the former employer are not affected by your concurrent employment.

 

Since this redundancy pay is paid by the employer, it constitutes a severance package, and you are allowed to work while receiving that redundancy pay. Since you are now working for the temporary agency, and not the original employer, even though your place of work is at the originial employer's place of business.

 

The only thing that will be affected by your taking a job so soon after redundancy is that you might lose or have a greatly reduced job seekers tax allowance.

 

BUT the tax free status of the 30,000 will not change, simply because you started work with another employer:

 

the ONLY time redundancy pay is taxable is if the employer specifies a portion a payment for benefits. The benefits portion is taxable.

 

References:

 

http://www.hmrc.gov.uk/guidance/redundancy-factsheet.pdf

 

 

 

 

 

 

 

Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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