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Backgound

I currently work in the Southcoast in the UK for my employer. They are shutting our site (my contracted place of work) and making the whole workforce redundant and moving the site to Oxford.

They are making us all redundant because they do not think it is reasonable to expect anyone to travel from Brighton to Oxford (which is fine).

Now under our 1-2-1 consultations, my work has asked to see if I can come back as a Contractor for a few months on a Project we have left, starting a month after we have left (I work in IT).

The new role will be based in their London Office and I can work from home some days and they want me to start a month after I have been made redundant (So i wont leave the Friday and return Monday).

So I have been investigating this, and obviously found things like:

  • IR35 and the many rules around being classed as an employee with said company.
  • Coming back to my current work place, I could be liable to pay tax on my redundancy if I'm not careful.
  • My role is being made redundant because my place of work is being shutdown. They are not replacing my role with any FT employees at the new site in Oxford.

Advice

Is there anything else I need to consider or be careful on here or advice people have? I haven't made a decision yet, because my redundancy package is really good (Well over statutory) and I have been at the company a while, so my redundancy payment is over £30,000 (the excess I'm putting into my pension), so in don't want to risk paying the tax on the £30,000.

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    What makes you believe that going back to work after being made redundant will make you pay tax on your redundancy payout? – user44108 Nov 9 '18 at 7:30
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    Are you planning to contract longer-term beyond the few months they need you? If not, maybe consider a contractor umbrella company. It would negate many of your concerns, as well as any hassle with having to set up a company, find an accountant, etc. – delinear Nov 9 '18 at 8:14
  • @snow: During the group consultancy period, I was a group rep who attended a legal session with an employment lawyer on how the group consultancy process worked. A question was raised similar to my situation and the lady said the redundancy could be seen as void, and the payment classed as a "gift" and would be taxable income. – garfbradaz Nov 9 '18 at 12:43
  • Will you be doing the same type of work, you do now at your redundant role? – Strader Nov 9 '18 at 20:43
  • @Snow the tax man will look at this and say its tax avoidance – Neuromancer Nov 10 '18 at 17:26
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IR35 and the many rules around being classed as an employee with said company.

This would potentially be a concern, a good accountant with experience in the contracting market will be able to advise you on this aspect (and you can also get IR35 insurance to be safe). The expected IR35 crackdown in the most recent budget (for FY2019) didn't happen which helps, and assuming the contract is worded appropriately you should be able to protect yourself.

Coming back to my current work place, I could be liable to pay tax on my redundancy if I'm not careful.

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My role is being made redundant because my place of work is being shutdown. They are not replacing my role with any FT employees at the new site in Oxford.

IANL but there's nothing about your situation that will cause you to get taxed on it. The £30k tax-free allowance will still apply. What you're likely conflating is that fact that if your redundancy was "synthetic" (i.e. you started back in the same role and the same employer straight away) then you'd be considered not to have been made redundant. Given that you'll be "returning" as a contractor a month later and to a different site and position you'll be fine.

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First rule of contracting - get yourself an accountant. That’s all that you need to know – they know the rest.

I wrote a very long and detailed answer, but on reflection, the sentence above is all you need, so I deleted the rest.

It helps if the accountant has dealt with software contractors. There are plenty around. I can’t name mine here (site rules), but if you contact me in chat, I will give you contact details.

Relax, and let the professionals take over . For every pound you give them, they will save you ten (minimum). You have landed on your feet.

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  • As usual, no explanation for he downvote – Mawg says reinstate Monica Nov 9 '18 at 12:30
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    "they know the rest." - No they don't. My first one in 2001 knew nothing about expense payments and their mess resulted in an extra £26000 tax bill. I had to remortgage to pay it. It's all very well engaging someone to prepare your returns and advise you, but you should have at least an understanding of what's being done on your behalf. – Justin Feb 8 '19 at 22:55
  • I totally agree and am sorry for your loss. I was lucky enough to study accountancy at uni, before turning to software. But, nevertheless, I pay professionals. The first question anyone should ask a potential accountant is "how much experience do you have in <my profession>". I used to do accounts for taxi drivers, bookmakers, greengrocers ... I wouldn't want me doing my accounts as a software engineer who needs to be aware of IR35. I can recommend an excellent firm in chat, if anyone in software in the UK needs it – Mawg says reinstate Monica Feb 9 '19 at 8:21

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