Redundancy payment options with MVL

[malvolio]

There is a good argument along the lines of a director cannot make themselves redundant because doing so requires them to decide to make the position redundant, but clearly the position still exists or else nobody would be able to complete the redundancy process.

You can also argue that a director holds a substantive post in the company under the Articles of Association which only ceases when the company does.

That said, it's all a bit moot since you are not an employee. As has been said.

HTH. Probably not...

[SKG]

Thanks guys, after reading the posts, it does make sense. Thanks for clarifying and there's no reason to claim redundancy.
Cheers Si

[northernladuk]

I believe, both myself and my wife are/were employees of our ltd company.

No you weren't. Did you both have a contract of employment? No you didn't. You prove it in your next sentence.

We are both shareholders and were paying around 9k salary and we pay ourselves dividends of around 30 K.

If you were paying yourself 9k then you are breaking the law. An employee must pay themselves NMW by law.
Shareholding and dividends have absolutely nothing to do with employment.

My wife took a break as she was looking after young children. She has taken permanent job last month since we are closing ltd company and I am working via umbrella since April. I am little lost as my accountant gave me the impression that both myself and my wife were employed by out ltd company and we are employees.
We have no plans to open ltd company again as we both have started working via umbrella and permi for her. We have got substantial money in our ltd company. Isn't MVL best way to windup things? What other option do we have? Thanks Si

The problem is some accountants ride pretty close to the law and will tell you what could be possible rather than what is legal. It is probably possible to pay yourself redundancy as no one will check, just like it's possible to put some expenses through that are not wholly and exclusively. Their opinion might be it's such a grey area you might as well do it as other people are. That is very different to doing what the law says. It's all about pedantry. If you want to dig further go ask your accountant about your contract of employment, why you are paying yourself less than NMW, what is the difference between an officer of the company and an employee is. I bet they will give you a very woolly answer that doesn't meet the words of law.

I'd say no just by the fact your wife worked for you for a short term during her break and then claims redundancy. That would look like a slam dunk case of tax evasion to HMRC. Take her on for a short time then bang 30k tax free her way. That's not gonna wash.

Neither of you are being made redundant. You have both left the company to start new jobs. Period.

MVL yes. Maslins does MVL's so give him a ring.

[Maslins]

I don't think the MVL is the controversial part of your post. It's the redundancy. I simply don't see how a director of a solvent micro business can justify the beneficial tax treatment of making themselves/spouse redundant.

Might be worth considering significant pension contributions, though if that doesn't appeal or you've already maxed out there, final net assets are >£25k, then an MVL is likely your most tax efficient option. As NLUK mentioned, be warned if you restarted a similar business within two years you'd likely lose that beneficial tax treatment and have it all taxed on you as dividends (rather than CGT with/without BADR).

[SKG]

Thanks for your replies. I believe, both myself and my wife are/were employees of our ltd company. We are both shareholders and were paying around 9k salary and we pay ourselves dividends of around 30 K. My wife took a break as she was looking after young children. She has taken permanent job last month since we are closing ltd company and I am working via umbrella since April. I am little lost as my accountant gave me the impression that both myself and my wife were employed by out ltd company and we are employees.
We have no plans to open ltd company again as we both have started working via umbrella and permi for her. We have got substantial money in our ltd company. Isn't MVL best way to windup things? What other option do we have? Thanks Si

[northernladuk]

Do the regulations allow for redundancy payments?

No

Like many, I was operating as an employee through a limited company to a third party where I am a contractor.

None of us are doing that. We are not employees. If we were we would have to pay NMW or more which we don't do amongst other things. We are officers of our companies, not employees.

My company, of which I have been an employee for the past 10 years

No you are not. As above and you do not have a contract of employment either

Do the regulations allow for non taxable redundancy payments by the company to the employee in such situations?

If you were an employee possible but you aren't so I'd leave this one alone.

Redundancy is designed to compensate for an individual in the event that their job role no longer exists only directors of insolvent companies are eligible to claim. Should a director decide to close their solvent company this is viewed as a resignation rather than a redundancy

Remember if you get a tax advantage form the distribution via MVL you cannot open another LTD for two years. Many people being caught by this when their inside gigs ends after three months and find they can't go outside for the next 21 months.

[Paralytic]

https://www.google.com/search?q=site...com+redundancy

Are you 100% sure you are/were an employee of your company? Do you have a contract you could show HMRC?

[SKG]

I have moved with Umbrella from April 2021 and was operating via my limited company til April for last 10 years.
Do the regulations allow for redundancy payments? My accountant has advised that I can pay myself £30K tax free.
Like many, I was operating as an employee through a limited company to a third party where I am a contractor.
Third party stipulated that we were inside IR35 and advised that we go through approved umbrella companies
under standard PAYE terms.
My company, of which I have been an employee for the past 10 years, and joint shareholder with my wife,
will therefore closing soon. It will have no other income.
My own personal circumstances are unchanged - I have continued to contract to the same end client, by simply
switching contracts from one employer, my company, to another, the umbrella company.
Do the regulations allow for non taxable redundancy payments by the company to the employee in such situations?

Has anybody done this? Are there any steps to follow before I contact MVL companies? Any recommendations please?

Regards Si