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A zoom through redundancy pay
Key points
- To work out the tax treatment of a termination payment it has to be broken down into the taxable and non-taxable elements.
- If a termination payment is contractual it is taxed in full. If it is not contractual but there is a reasonable expectation of receiving it it is still taxed in full.
- Some types of termination payment are exempt from income tax and National Insurance.
- There is also statutory redundancy pay although employers can also pay non-statutory redundancy or ex gratia payments for compensation for loss of office the first £30 000 of which is tax-free.
My friend Ioana calls for our Thursday night Zoom catch-up. She works in marketing in London and we swapped our weekly meetings at our favourite burger restaurant for Zoom sessions what feels like a lifetime ago. We used to make burgers at home...
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