£30,000
Up to £30,000 of redundancy pay is tax free. Any non-cash benefits that form part of your redundancy package, such as a company car or computer, will be given a cash value. This will be added to your redundancy pay for tax purposes. This might then take your total redundancy pay over the £30,000 limit.
Is redundancy pay classed as income?
Your redundancy payment won’t be treated as income when working out how much benefits you can get. It will be treated as capital. This means that the amount you get in redundancy payment will be added to any other savings you have.
What is the tax free amount for redundancy payments?
The tax-free limit is a flat dollar amount plus an amount for each year of service you complete in your period of employment with your employer. Indexation changes the tax-free limit on 1 July each year. Your employer will report the tax-free amount as a lump sum on your income statement or PAYG payment summary – individual non-business.
Can a person claim additional compensation for redundancy?
You may also be able to claim additional compensation from your employer if you were unfairly selected for redundancy, for example because of your sex, race, religion or a disability. You should seek legal advice if you think this may apply to you.
How can I find out if my redundancy payment has been affected?
Work out if your genuine redundancy or early retirement scheme payments have been affected by the changes on 29 October 2019 and the amounts to include in your 2020 tax return, using the steps below:
Do you have to pay in lieu of notice for redundancy?
Depending on your employment conditions, for example, amounts your employer is required to pay under the industrial agreement or employment contract, a genuine redundancy payment may include: payment in lieu of notice.
