Legal

As a company director, you may be familiar with redundancy pay in relation to your workers. However, did you know that redundancy pay for company directors is claimable?

 

Directors’ redundancy pay, also known as director redundancy, is a sum of money directors are entitled to in the eventide that their company goes bankrupt or has to close.

 

If your limited company is struggling and it appears as if liquidation may be the only way out, many people mistakenly think they’re out of options. You might not have enough money to liquidate your company.

 

In this instance, you may be eligible for several statutory rights that could help immensely right now. The director is compensated through settlements based on eligibility criteria. They can spend the money as they please.

 

This payment could help ease the financial burden after a company closes, or it may be used to start a new limited company if the director chooses to.

 

If your small company has been running for more than two years and you’re thinking about shutting it down because of financial issues (like Creditor pressure, HMRC debt, cash flow concerns, or potential liquidation), you might be eligible to receive director redundancy payments based on the UK average claim of £9000.

 

Furthermore, you may be eligible for benefits such as notice pay, holiday pay, and unpaid wages – but many company directors lack knowledge of these rights.

 

If you qualify, you can request forms for the National Insurance Fund through the Redundancy Payments Service (RPS), tax-free. You may ask the liquidator for a form or fill one out online.

Do you qualify for Statutory Redundancy Payments?

If you want to qualify for statutory redundancy pay as a director, you must first and foremost be seen as an employee of the company. The following are the requirements that come along with this:

 

• Working under a contract of employment for at least two years, rather than having only a controlling interest,
• You’re owed money by the company – for example, arrears of PAYE or the capital you put in.
• Working a minimum of 16 hours each week

How much redundancy pay will you receive?

Your redundancy pay is based on how long you’ve been with the company, your age, and your hourly wage. You’re also entitled to a gross weekly wage of £544 per week at the time of redundancy.

 

Your length of service (capped at 20 years) is used to calculate how much redundancy cash you’ll get. You must also have been an employee of the firm for at least 2 years.

 

As an employee, you are entitled to back-dated pay and holiday pay if your company becomes insolvent.

 

If you meet the criteria, it’s likely that you’ll be entitled to claim redundancy pay and other statutory entitlements if your company goes bankrupt. These include holiday pay, back pay, and notice periods.

How to Submit a Claim for Redundancy

Before claiming director redundancy, you must meet specific requirements. The easiest way to determine your eligibility is by consulting with an independent company that specialises in helping directors comply with their statutory obligations.

 

Up to eight weeks of unpaid wages, as well as six weeks’ holiday pay, may be recovered from the Insolvency Service National Insurance Fund. This is the fund where National Insurance Contributions are kept and used to pay for statutory programs such as redundancy and the state pension.

Is it Possible For My Co-Director to Claim redundancy Pay?

When a company goes bankrupt and is forced to liquidate, its directors can each submit their own individual redundancy claims. How much they receive will be based on varying factors such as age, how long ago they were hired by the company, and salary.

 

All directors who can demonstrate that they worked for the company in any capacity will have a right to make a claim as long as the above-mentioned criteria is met.

 

If a married couple is recorded as company directors, this may imply that each would receive a redundancy payment.

How much can I claim?

The amount of money you will be eligible for will be determined by several criteria, including your age at which you were made redundant, the length of time you worked for the firm, and your salary at the time.

If you qualify for redundancy, it will be based on gross weekly pay. Here is how it will be calculated:

 

• 18-21 years of age: half a week’s pay for every year of service
• 22-40 years of age: one week’s pay for every year of service
• 41 years of age and over: one and a half week’s pay for every year of service

 

In addition to this, you may be entitled to up to eight weeks of unpaid wages and six weeks of holiday pay if you have any accrued but unused annual leave.

 

Depending on your specific circumstances, notice pay, which is equivalent to one week’s notice for each full year of employment, might also be owing.

What can I do with my redundancy pay?

What you do with your director redundancy payout is up to you; the money is yours to use as you please. Severance pay is only given after a company has undergone formal liquidation, and some people use part of their payout to finance this procedure. Redundancy payments can be used for everyday living expenses, savings, or starting a new business venture.

 

Who can I contact for help?

If you are company directors of an insolvent company and are considering a Creditors’ Voluntary Liquidation (CVL) and have questions about director’s redundancy pay claims. Here at Company Doctor, our insolvency practitioner licensed by the Insolvency Practitioners Association with decades of experience can offer you the skills and support needed. Complete the form on through the page dedicated to this topic or give us a call today.

Although the winter months are the most wonderful time of year, many people are anxiety-ridden about their finances. With inflation at an all-time high, it’s difficult to not be stressed during this season. However, there are ways you can financially prepare for winter financially. Here are some tips:

 

If you’re like many people, the holidays can be a stressful time financially. But it’s never too early to start budgeting and planning so that you can make it through the season without going into debt.

 

Heading into winter, use our money-saving tips to help ease the impact of colder months. By being proactive now, you can avoid stressing about expenses later. So, start preparing today by making your home and life more winter proofed and improve your finances.

Check your car

Now is the ideal time to make sure your car is in excellent working order before the worst of the winter weather hits. This includes checking your battery, scheduling a service, and using winter tires with only a few minutes of upkeep on most cars.

 

Winter weather is never ideal for driving, and if your car has any problems they will likely be exacerbated in the cold. Make sure to have your vehicle inspected before winter begins to avoid expensive repairs down the line. Also make sure your tyre pressure, you can find out your correct tyre pressures here.

Start shopping early

If you start your shopping list early in the year and buy items as you find them, rather than wait until closer to the holidays, you can save money and avoid crowds. That sounds like a plan!

 

Even though summer has officially ended, that doesn’t mean you can never find good deals on summer gear. If you wait until retailers want to get rid of their seasonal stock or take advantage of post summer sales, then you won’t have to spend as much money all at once and will be able to save some for times when your income is low. To make things easier on yourself, always remember not to overspend, and stay positive throughout the process.

Budget for unexpected expenses

Being caught off-guard by expenses is always a possibility, but if your funds are already tight, this can be a disastrous position to be in.

 

By budgeting for both your daily and unexpected expenses, you can create a cash cushion to ensure that you have the funds to cover typical cold weather costs like a broken water heater or burst pipe.

 

Homeowners in the UK are facing energy suppliers who could end up charging energy bills over £4,000 a year from next April when the Government’s Energy Price Guarantee comes to an earlier than expected end. But if you take some time to prepare now, you can make sure that bill becomes extra cash in your pocket.

Winter Proof Your Home During the Cold Weather Season

With winter well and truly upon us, now is the perfect time to start thinking about how you can make your home more energy efficient to minimise energy usage and reduce your heating costs. Simple things like investing in draught excluders or curtain liners can help keep the heat inside, saving you money on your heating bills.

 

Although it may only take a couple minutes, regularly checking your gutters and insulating your home can save you loads of money on energy bills in the long run. You might even be able to get free loft insulation.

Sign up for loyalty schemes

Joining loyalty programs can help you take advantage of seasonal sales and discounts, as well as save money with the current cost-of-living crisis. Prices for basic necessities like food and gas have been rising steadily, making it difficult to make ends meet. But with a little planning and careful spending, you can stretch your budget further by taking advantage of loyalty program rewards.

 

If you want to save money on your groceries and cut down your food bill, signing up for supermarket loyalty schemes is a great way to do it. Most of these programs are free to join, and they can give you the best deals on products without any hidden fees. So, if you haven’t signed up for one yet, now is the time! It only takes a few minutes, and it could save you money every week.

 

Shopping online? Then you should always search for voucher codes before making purchase as most retailers usually offer some form of discount from free postage up to a percentage off the total basket cost Always handy saving money and to stretch your money further over the festive period.

Further Advice & Guidance

If you are worried about being able to afford paying for all your household bills this coming season, you can speak to a charity such as Citizens Advice Bureau who can provide details of any additional benefits you may be entitled to

 

However, if you are already struggling with debt and are worried about further rising energy prices, please don’t hesitate to contact Become Debt Free today or leave an enquiry here.