Redundancy Tax Free Limits
Redundancy Tax Free Limits
If you are being made redundant it is worth knowing how much redundancy will be tax free.
From the 6th of April 2011 the Government introduced a new 50% redundancy tax will affect all redundancy payments over £30,000.
The tax free amount of a redundancy payment remains £30,000 but anything above this tax free threshold will be deemed to be a monthly payment and increase your monthly earnings. The 50% tax rate will only be applicable if the redundant person is within the higher tax threshold.A redundancy payment of greater than £42,500 will bring an individual into the 50% tax bracket.
Also it is worth remembering that if the person’s redundancy payment crosses the higher tax threshold, all their income from other sources such as their savings, shares, second job wages or rental income may be taxed at the higher tax rate.
The key limit here is £30,000. If you are getting this or less then you will pay no tax upon it.
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