how to word redundancy pay

[karenlr54]

I am a director and shareholder of a Ltd co the other half is owned by my husband
our income is both payee and dividends and has been kept just under the threashold
we are divorcing and i am leaving the co and giving (not selling ) my shares to my husband
As part of my settlement i am taking £30,000 in redundancy
I do our accounts on an excel spreadsheet and also do the wages on hmrc paye software
I know there are 'rules' to redundancy there is no employers contract in place
how will i word this payment in our spreadsheet and how will i process this through the payee software?
i don't what to get it wrong for the payee as now it is realtime there will be no chance to correct an error
does my p45 have to be issued before after or on the day of redundancy?
as this is going through the payee system if there is any tax to pay will the co pick this up i may have earn't a couple of months salary and dividend payments before the redundancy goes through
I was told that it could use the redundancy payment as an expense and claim 20% of the corp tax
is this correct
Many thanks

 

[Energise Accounting]

I would advise speaking to a employment expert. The normal way of dealing with things would be for you to sell your shares back to the company providing their are enough reserves.

 

[billmccallum1957]

https://www.gov.uk/redundant-your-rights/redundancy-pay

Up to 30K is not taxable, not sure how RTI works (our accountant does ours) so cant advise on how to process the payment.

 

[karenlr54]

Our accountant wont advise me even though i have asked though he has been giving my husband 'advice' i paid out and asked another accountant she suggested redundancy could be an option as my husband doesnt want me working in the business anymore this seemed a suitable option i wasnt going to sell him my shares just give them to him as I thought if there is a transfer of funds for them there could be capital tax gains to pay? I just want to know how to 'word' it in the accounts and paye as our accountant wont help

 

[UK Contractor Accountant]

I think you will need to take paid tax advice on this as HMRC have a habit of challenging the £30K payout when share transfer are also involved - artificial arrangement

 

[Energise Accounting]

I agree with @UK Contractor Accountant the best way is to sell your shares back to the company. HMRC will have no problem with this. You may qualify for entrepreneurs relief which will reduce your capital gains.

Your accountant should be acting in the interest of the company except for matters on personal taxation

 

[karenlr54]

yes i know what our accountant should be doing but he isnt its a nightmare...i have taken paid tax advice...cost me a fortune and also solicitors advice too...it isn't an artificial arrangement ..my husband wants the co and wants me out he wants our accountant now to do my job the accounts vat wages etc and he now wants to do the invoicing quotes etc himself ... we have been in business together since 2002 first as a partnership and for the last 5 years as a ltd co ..I think it will end up in court because my husband doesn't want me to have any thing my solicitor and another accountant have advised me to ask the court for the payment settlement to be the amount after tax has been pd so i have been trying to find the best solution i don't really want to give him my shares which i will freely do until after the divorce and settlement are over as i do not trust him or our accountant for that matter...i simply dont know what to do for the best ...redundancy was an option

 

[Energise Accounting]

Just because your husband wants to keep the company dose not mean it is not a artificial agreement as far as HMRC are concerned

You are still a director of the company and you should make this point to your accountant and get him to start co-operating as it is beneficial for your husband as lawyers and courts cost serious money. All the guidance i have looked at so far points to selling your shares back to the company as mentioned.

for the accountants sources of info
Tax Planner interactive gives detailed guidance
Bloomsbury tax guidance books

 

[karenlr54]

I only mentioned redundancy because another accountant said it could be done if i sell my shares back to the co at £30,000 (they were issued 1 share each amount pd up on each £1 nominal value)
what would my charge be and what would the cost to the co be?...what paper work would be needed to go with it?
I know court will be very costly ..so does my husband but in his aim to get me out with nothing he is rather blinkered.. As for the accountant well he has worn me down over the years if you see the amount of unanswered emails i have sent him over the years regarding different things he just blatantly ignores them...my husband thinks he is great by the way

 

[UKSBD]

If the statutory redundancy is only about £3k how could you justify the £30k?

 

[Energise Accounting]

Your accountant will have to deal with issue of buying back the company shares. I do not know how much he will charge in fees but it will be cheaper than going to court. It would be a good idea for both you and your husband to make an appointment with the accountant to discuss the issue.

I would of thought all of this is in your husbands interest as well. so you can both move forward with your lives.