Redundancy – What now?
Redundancies are on the rise. New research from the Office for National Statistics published on Tuesday has found that the unemployment rate in Wales has risen to 3.1% while a recent analysis by the Institute for Employment Studies (IES) found it was likely the UK will be hit by around 450,000 redundancies in the coming months.
Coming to terms with redundancy is a challenge. Here, three experts give advice on managing the financial and emotional impact. How can you turn this into an opportunity?
The initial shock can make it difficult to see the way ahead. People define themselves by their job; by being a member of a “tribe.” So you may find that one of your first problems is humiliation and depression at being excluded from the “tribe.”
“There is a lot of stigma around being unemployed and it can have a huge impact on your mental health,” says Keiron Sparrowhawk, a former neuroscientist and founder of MyCognition, an NHS approved app used by Welsh clinicians to manage mental health. “My advice is to keep to a good regime of habits: eat well, hydrate, sleep regular hours, and most importantly, stay socially active as much as you safely can, particularly with people who build your esteem. Exercise, particularly outdoors, is also important. If you’re near a beach, go and get some fresh air and swim; join a club if necessary. Wales has a fantastic coastline and beautiful countryside so make the most of it. It will do wonders for your outlook on life.”
Once you have your head in order it’s time to take some practical action. Tommy McNally, a tax expert and founder of the free Tommys Tax App has some good news for you. “The chances are you’re owed a very significant tax refund. That’s because HMRC estimate your annual tax bill from your income on 1st April and then divide it into 12 payments. So, if you’ve been made redundant before the end of September, you’ve actually only earned half what they’ve taxed you on. We’re getting average tax refunds of £3,000 for our users.”
HMRC will, eventually work out that you’ve paid too much and will give you a refund, but that could take a year. Tommys Tax App will calculate what you’re owed and even go and get it for you, without charging you until the money’s in your account.
However Tommy is also keen to point out that you’ve probably not claimed all your expenses and this will increase your tax refund; “Even as an employee, if you’re working from home you’re entitled to claim for utilities and of course you can claim for uniforms, tools and PPE equipment.”
It is really common for new businesses to be started by people who have been made redundant. This may seem like a daunting prospect, but Wales is a great place to start a business. On a population of just over 3 million people there are 222,980 registered small businesses. There are 413 Grant Programmes and 197 Loan Programmes to help you and 310 Assistance Programmes.
Steve Taklalsingh, Managing Director at Amaiz Business has some tips to get you started. “Thinking of a business idea can be exciting. In amongst the dreaming, start thinking in practical terms. Research your market. Who are the competition and how are you going to attract customers? Start writing it down in a structured way. Whether you’re seeking funding or not, a business plan is crucial to success. There are lots of free tools to help you.
“The next step is to make the company a legal entity. There are many options for that, from the less formal sole trader to the private limited company. Decide which structure works best for you and your ambitions for the company. If you want to apply for funding you will usually have to be a limited company.
“Setting up a separate business account is really important. Without it, your accounts will be a mess and you risk fines from HMRC. Using a modern banking app, like our also means you can automate your accounts.”