TAX TIP OF THE WEEK - Are you looking to close or sell your company soon, then perhaps you could benefit from a redundancy package.
Employees (including directors) laid off due to a business being sold or closed down, can be entitled to statutory redundancy payments that are TAX FREE up to £30,000.
The redundancy payment is calculated based on payroll wages, age and time worked for the business.
This causes a problem for owner directors as they are most likely on a low salary/high dividend remuneration strategy. Meaning the amount they are entitled to will be minimal.
The way around this is to include a contractual right redundancy pay in your employment contract, this would be based on all income from the company including dividends.
This can not only give you £30k tax-free, but will also save approx. £6k in corporation tax & £3k in CGT.
Hope this was helpful, for lots more tax tips and strategies get a copy of our 71 ways to save tax checklist https://bit.ly/2YQbhvr