As a limited company in financial distress, company liquidation may be the only remaining avenue if there’s no chance your business will survive. An ailing business with no prospects puts creditor interests at risk, so it’s crucial to act with haste. If your business is past the point of recovery or it no longer serves its desired purpose, it’s time to reach out to an insolvency practitioner to explore company closure options.
An insolvency practitioner will advise you on how to settle outstanding affairs with creditors best and bring your limited company to a close. This is an optimum time to take count of your funds, including any statutory payments you may be entitled to.
Jonathan Munnery, a company closure expert at UK Liquidators, the UK’s leading provider of limited company liquidation services. Jon explains what statutory payments you may be entitled to as an outgoing company director.
What payments can I claim as an outgoing company director?
As a limited company director, you’re employed by your limited company, and therefore, classed as an employee. As such, you may be entitled to a host of statutory payments following the closure of your limited company.
If your limited company is insolvent, you may pursue a formal company liquidation procedure to close your limited company. As a result of the liquidation, employees will be made redundant, which opens you up to eligibility for a range of statutory payments.
Statutory payments limited company directors can claim following the insolvent liquidation of their company includes:
- Redundancy pay
- Holiday pay
- Notice pay
- Unpaid wages
To successfully claim for such payments, you must fulfil some requirements.
Do I qualify for director redundancy pay?
To qualify for director redundancy pay, you must fulfil a range of requirements. This will also determine how much redundancy pay you will qualify for. A tax-free windfall of this kind can be hugely beneficial as it can help you get back on your feet, get your finances into order and start a new chapter.
To qualify for redundancy pay as a limited company director, you must meet the following criteria:
- Worked under an employment contract for a minimum of two years
- Worked 16 hours weekly as a minimum
- Owed money by the company
- Submit your claim within 6 months of being made redundant
While an employment contract is essential to qualify for redundancy pay, this is allowed in either written form, oral or implied otherwise. An example of being owed by the company includes funds such as personal money invested into the company or arrears of PAYE.
How much you qualify for will be determined by a handful of factors, that include:
- Your rate of gross weekly wages
- Your length of service
- Your age at the time of redundancy
Caps apply to each factor and a maximum that you can claim for redundancy pay.
How can I claim director redundancy pay?
If you believe that you may qualify for director redundancy pay, or you are unsure, get in touch with an FCA authorised and regulated advisor to qualify, prepare and submit your claim. Alternatively, you can submit a claim online.