Lump sum now, 20% higher amount in dribs and drabs over next year or 28% higher amount in dribs and drabs over next 18 months?

[trixymalixy]

I'm being made redundant so have a choice of a lump sum now, maternity pay as per normal plus a lump sum in a year's time the total of which would be 20% higher than lump sum now or a 28% higher amount in dribs and drabs with a smallish lump sum in 18 months.

WWYD?

It depends on your situation more than anything else, I think.

If you don't have anything obvious to 'do' with the money (i.e. you will be using it as income rather than to pay off debts or buy a yacht) then I'd take it as income - interest rates are so low that you won't get v much extra on taking it up front and investing it.

If you are planning to pay off debts it might be worth it - although only if they are at a ridiculously extortionate interest rate does that even add up.

The only q is, is there a risk of the firm going bust? If so, take it all now...

When this was first suggested to me there was a significant risk of the firm going bust, I think that is less of an issue now, but still a risk.

We would use the money to pay off about a 1/3 of our mortgage, which would be moving off our fixed rate onto the base rate at the end of June so not a particularly high rate at the moment. This would also mean that if rates were to increase then we could re mortgage based on DH's salary alone, this might not be possible with our current mortgage on his salary alone.

The other thing I thought - after I posted - was that you need to get some advice on the tax situation, as the potential tax bill will vary enormously depending on what you choose to do (and on your own and DH's earnings and what you expect to earn in the next year etc etc etc)

having said that, if there was much of a risk of the firm going under at all, my instinct would be to take the money and pay off some of the mortgage. [disclaimer: vsf is neither an accountant nor a fortune teller...]

The tax situation depends on how quickly I get another job after mat leave.

Assuming i get another job straight away after mat leave then I would be better off with the lump sum now.

I think - but I really am not an expert - that there are different tax rules depending on whether you receive the money as a redundancy lump sum or as salary. But I, really, do not know about this. It might be worth going over to employment issues, as there are people over there who will know the ins and outs of this

I know that the first 30k is tax free.

Thanks for your replies.