Redundancy Tax Free Threshold 2011
Redundancy Tax Free Threshold 2011
Your redundancy payment
Your employer may make a redundancy payment to you to compensate for ending your employment. This may be part of a redundancy package, which can include payments made for reasons other than your redundancy. The table below shows some examples of these payments and when tax and NICs
are payable.
Payment: Redundancy payment
Do I pay tax? Only on the amount above £30,000
Do I pay National Insurance? No
Payment: Unpaid wages
Do I pay tax? Yes
Do I pay National Insurance? Yes
Payment: Bonus payment
Do I pay tax? Yes
Do I pay National Insurance? Yes
Payment: Occupational pension
Do I pay tax? Yes
Do I pay National Insurance? No
Your employers will deduct tax and NICs using the guidance HMRC provide. They should also give you a form P45 Details of employee leaving work when you leave.
Items other than money
Anything else you receive which is not money is converted into a cash value for tax and NICs purposes. If these items were given to compensate for your redundancy, the cash value counts toward the £30,000 tax–free limit.
Contact your employer or HMRC if you want more information about tax and NICs on your redundancy payment or the payments included in your redundancy package.
If you think you have paid too much tax, you should contact your tax office to claim a refund. They will tell you what information to provide and if there are any forms you need to complete.
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