JobsInwales.com Redundancy Information

Redundancy is usually when you have lost your job because your employer needed to reduce his or her workforce and your job has disappeared. Your redundancy payment Your employer may make a redundancy payment to you to compensate for ending your employment. This may be part of a redundancy package, which can include payments made for reasons other than your redundancy. Dealing with tax and National Insurance contributions If your employer pays your redundancy pay before you leave the employment, form P45 will reflect the pay and tax deducted through Pay As You Earn (PAYE). If you are paid after you have left the employment and you have already been given form P45, your employer should not give you another. Instead you should be given a copy of a letter that your employer sends to the Inland Revenue stating:- • the amount of payment • the date it was paid, and • the tax deducted. Items other than money Anything else you receive which is not money is converted into a cash value for tax and National Insurance contribution purposes. If these items were given to compensate for your redundancy, the cash value counts toward the £30,000 tax-free limit. Contact your employer or the Inland Revenue if you want more information about tax and National Insurance contributions on your redundancy payment or the payments included in your redundancy package. Claiming a tax refund after redundancy If you are claiming Jobseeker’s Allowance, give the form P45 to the Jobcentre Plus office when you claim. If you are due a refund, you will be paid either • when you stop claiming or • just after 5 April. If you are not claiming Jobseeker’s Allowance, ask for form P50 Claim for income tax repayment from any Inland Revenue office. Fill it in and send to your own Inland Revenue office with part 2 and part 3 of your P45. We will tell you if a refund of tax is due.

Accident, Sickness & Redundancy Insurance (ASR) An insurance policy designed to help you in the event of accident, sickness or redundancy. It will typically pay a percentage of your normal monthly mortgage payment for a specified period. This type of cover does not apply to voluntary redundancy or dismissal due to misconduct, or if your injuries are self-inflicted. ASR is sometimes also known as Accident, Sickness and Unemployment (ASU) insurance. Redundancy Insurance Policies Often sold with mortgages, credit cards and purchases, 'Income Protection Plans' or 'Payment Protection Plans' etc are insurance policies that offer payments when someone loses their job. As with all policies it is worth reading the small print with care. If you have already been made redundant it may be worth while checking your existing policies for mortages and credit cards to see if you are covered. Payment protect can be expensive so it pays to look at alternative policies. Typical exclusions Waiting period - from when you take out the policy - before you are eligible for payments (eg 3 months) Eligibility criteria (eg in permanent work for a period for at least 6 months) Period after redundancy before payments start (typically 30 days) Period that payments will go on for (typically 12 months) As with all insurance policies it is important to be absolutely honest in answering the policy questions. Yes - it is a relevant piece of information if your company has announced redundancies! Impact on State Benefits The money received from the insurance policy should not be treated as income by the DSS provided the claimant is using the insurance to pay monthly payments on a loan, credit card, mortgage, or similar agreements.