uk_redundancy_package

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Redundancy pay, notice and untaken holiday together — and which parts of it the £30,000 exemption does not cover. Being made redundant pays you three different things, taxed three different ways, and the letter usually quotes only the first. Statutory redundancy pay is tax-free, and shares a £30,000 exemption with any ex-gratia top-up. Notice pay is not covered by it — since the PENP rules a payment in lieu is taxed as earnings whatever it is called. Accrued untaken holiday is not covered either. So "redundancy is tax-free up to £30,000" is true of one component and false of the other two, and someone with twelve weeks of notice and a fortnight of holiday can be several thousand pounds out. This adds all of it up and splits the tax the way HMRC does, including the National Insurance boundary, which sits in a different place again. Northern Ireland is included, with its own higher limits.