Pay-off problem

I am sure that I am not the only adviser who has clients who are struggling in the present ‘downturn’.

A director of a small manufacturing company has advised me that he believes that he will have to make some of his shop floor and sales workforce redundant over the coming months and was asking about the tax implications.

I know that there is a maximum limit to tax free payments on redundancy of £30 000 but I wonder if readers can give me any general guidance as to how this operates.

Naturally I want to avoid HMRC coming along afterwards and arguing that there is a tax liability on the payment.

The director wants to soften the blow as much as possible and was thinking about continuing to offer benefits or assistance to ex-employees for a period after redundancy.

For example what would be the position...