LRD guides and handbook July 2021

Law at work 2021 - the trade union guide to employment law

Chapter 11

Redundancy payments and tax

[ch 11: page 459]

Redundancy pay (both statutory and contractual) is tax free up to £30,000. However, employees and reps must be cautious. “Emoluments”, such as wages or notice pay, within any settlement are taxable as earnings (Richardson (Inspector of Taxes) v Delaney [2001] IRLR 663). Negotiators should take professional advice if in doubt. In April 2018, the tax treatment of payments in lieu of notice changed. See Chapter 10, page 356.