Redundancy: now or in the next FY?
Posted: Mon Nov 12, 2018 1:25 pm
Hi forumites, I'm new here, and I'd be very grateful for advice.
Please don't take this as bragging, and please try and look past the figures, purely at financial implications.
So - here's the deal. I'm about to take voluntary redundancy after having been with my firm for 19 years. They owe me, all-in, £126K in redundancy money.
My current salary is £82K.
I have about 15 days of untaken leave which, if I took the money now, they would have to pay me for. If I stay on until the next FY, I'm supposed to go and actually use my leave. I won't get anything for it.
I can either
a) take the money now - this would allow me to start doing other work from January onwards,
or
b) stay in my current role but on "gardening leave" until the end of the FY, taking redundancy in April 18. The stipulation is that I can't work for competitors while on gardening leave, but I can do other paid work (e.g., teaching etc). I can also continue to collect my salary - as long as I'm available to do some ad hoc jobs as and when my bosses feel they need it.
From a tax perspective, I understand that if I take the money now, this £126K (less the £30K tax free) will be added on to my earnings this year so far - and so a greater percentage of it will be taxed at the higher rate. If I were to take the money next April, I understand that my total earnings would be starting from a clean slate = smaller tax purely on a redundancy but a greater tax on whatever I earn next year. My expectation is that my income next year will be around £60K.
If I took the money in April, I also lose out on the payment in lieu of leave.
Also - this idea of sitting on my hands, at my bosses' beck and call, but with no real job to do, is very frustrating. I've now been doing that for about two months, and I'm finding it really difficult. So I know that, psychologically, I'd much rather cut my ties with the firm now and move on.
But purely from a ***money** perspective, what is the better deal?
Thank you!
Please don't take this as bragging, and please try and look past the figures, purely at financial implications.
So - here's the deal. I'm about to take voluntary redundancy after having been with my firm for 19 years. They owe me, all-in, £126K in redundancy money.
My current salary is £82K.
I have about 15 days of untaken leave which, if I took the money now, they would have to pay me for. If I stay on until the next FY, I'm supposed to go and actually use my leave. I won't get anything for it.
I can either
a) take the money now - this would allow me to start doing other work from January onwards,
or
b) stay in my current role but on "gardening leave" until the end of the FY, taking redundancy in April 18. The stipulation is that I can't work for competitors while on gardening leave, but I can do other paid work (e.g., teaching etc). I can also continue to collect my salary - as long as I'm available to do some ad hoc jobs as and when my bosses feel they need it.
From a tax perspective, I understand that if I take the money now, this £126K (less the £30K tax free) will be added on to my earnings this year so far - and so a greater percentage of it will be taxed at the higher rate. If I were to take the money next April, I understand that my total earnings would be starting from a clean slate = smaller tax purely on a redundancy but a greater tax on whatever I earn next year. My expectation is that my income next year will be around £60K.
If I took the money in April, I also lose out on the payment in lieu of leave.
Also - this idea of sitting on my hands, at my bosses' beck and call, but with no real job to do, is very frustrating. I've now been doing that for about two months, and I'm finding it really difficult. So I know that, psychologically, I'd much rather cut my ties with the firm now and move on.
But purely from a ***money** perspective, what is the better deal?
Thank you!