Redundancy Package - Earning

[chihhungkao]

Hi does anyone know if people get redundant and receive redundancy package. Let's say 3 months of salaries, can it be used as your earnings in the last 12 months for tier one extension?

Any thoughts would be grateful.
Thanks!

[Frontier Mole]

If it is in lieu of salary I believe it is counted as earnings.
I think it comes down to the fact is the payment taxable or not. If it is a PAYE amount then it is earnings. If it is a redundancy compensation amount up to £30K it is not taxable so is not considered as "income" - someone like JOHN will know the answer.....

[John]

FM, that is right, the first £30000 of a redundancy package is tax-free in the UK.

But a query in my mind asks ... is the same definition used for UK immigration purposes? That is beyond the scope of my knowledge.

Also, but not relevant to chihhungkao, if someone is made redundant abroad, before even coming to the UK, and the local tax provisions include a provision similar in concept to the UK's £30000 exemption, are they allowed to include the tax-free amount when making their initial Tier 1 application? Or does the tax-free amount need to be excluded?

Sorry, apologies, more questions than answers in this post.

[republique]

If it is in lieu of salary I believe it is counted as earnings.
I think it comes down to the fact is the payment taxable or not. If it is a PAYE amount then it is earnings. If it is a redundancy compensation amount up to £30K it is not taxable so is not considered as "income" - someone like JOHN will know the answer.....

I think you and John are right. When I got my redundancy as you say the first 30K is tax free, when I got my p60, that amount didn't show up and so you don't normally have an ability to declare in an extension because of documentation issues.
However, if you want to make a case for it, I guess you can try and say it is redundancy it is money that you got in lieu of pay and should be included in the amount of your earnings for the purposes of your application.
Thus, I'd say no technically but it could be considered as an exception to the rule and if you need the amount to get your extension I'd go for it.
Why don't you email the HO and ask them and if you are lucky and they say yes, then you can include the email in your application to avoid getting a less sympathetic caseworker.

[Frontier Mole]

I tried to get an answer about this situation; the rules do not stipulate what constitutes earned income in relation to PBS. It is impossible to differentiate between income subject to PAYE and income subject to self assessment. So from that point of view it matter not what the taxable situation is as long as it is accounted for.
HOWEVER payment in the form of compensation is not usually considered earned income and that is why it is not taxable. The rules for redundancy are reasonably clear in terms of compensation.

Standing away from the wood to look at the trees the obvious question comes to mind - how much compensation would you get if you have worked for less than five years? Unless there is a VERY favourable package the suggestion would be 90 days pay in lieu of notice plus a maximum of 5 weeks basic wage.

This assumes you have not crossed the 5 years you would require for ILR, so unlikely to have worked for the same employer for 5 years.

Best to ask UKBA for a direct answer, as suggested.