Geopolitical uncertainties and economic challenges have changed how we think about our finances. While things are improving, some employers still struggle with economic uncertainties. The threat of redundancy may still loom for some.
Redundancy no longer carries the stigma it once did, but with mortgages or rent to pay, very few of us want to experience it, especially with rising prices. If you have been made redundant or fear that you could be, there are simple and practical steps you can take to minimize the impact on your financial well-being.
Establish a back-up plan: Have sufficient funds set aside in an instant access account to meet your essential outgoings for at least three months.
Review your finances: Check your monthly income against outgoings. Budget for essential items like your mortgage, food, utilities, and car insurance. Consider what else is going out of your account and whether you can live without it.
Make sure you receive what you are entitled to: If you lose your job, ensure you receive all the monies due to you. If you have been with the same employer for two or more years, there are rules covering the minimum redundancy payment you should receive. If you are a member of a union or staff association, they will advise you or point you in the right direction for help.
Don’t pay more tax than you need to: Your employer may offer more than the statutory amount. Up to £30,000 is normally tax-free – but holiday pay and pay in lieu of notice are taxed. If you receive a lump sum, making an additional contribution to your pension is an efficient way to reduce your tax bill. You may be due a tax rebate, depending on the date your employment ends. Contact HMRC for help.
Don’t miss out on the benefits available to you: Consider registering for Jobseekers allowance. Depending on your circumstances, you may be eligible to receive credit for National Insurance. This will help prevent any sizeable gap in your NI records which could affect your pension and other benefits in the future.
Consider what you want to do next: Time for a career move, perhaps? Early retirement? Setting up your own business? Take the time to consider your next move and how it will impact your future. Review the benefits your employer provides and prioritize those you would want to replace, such as life cover, critical illness, pension contributions, private medical insurance, and income protection.
Whatever you chose, review the benefits your employer provides and prioritise those you would want to replace. For many of us these include life cover, critical illness, pension contributions, private medical insurance, and income protection.
If you’d like to learn more, please get in touch now.
Tax treatment varies according to individual circumstances and is subject to change.
This is a guest feature authored by Quilter Financial Ltd.
Sources:
https://www.gov.uk/redundancy-your-rights/redundancy-pay
Approver Quilter Wealth Limited, Quilter Financial Limited, Quilter Financial Services Limited & Quilter Mortgage Planning Limited. Quilter Financial Planning Solutions Limited April 2025.