Are redundancy payments relevant UK earnings?
If you have been made redundant and as a result receive
payments from your employer you should first establish exactly what
the payments relate to. As well as the actual redundancy payment,
the payments may be made up of items such as, for example, your
usual wages or salary, a payment in lieu of notice and holiday pay.
These will be
relevant UK earnings. See
RPSM05200060.
However not all of your actual redundancy payment is treated
as employment income. Any part of the redundancy payment which is
below the £30,000 tax exempt threshold is not classed as
employment income and does not count towards your total earnings
received in the tax year of receipt. However any amount above the
£30,000 threshold is classed as employment income and is also
relevant UK earnings.
Example
John has been made redundant and on his last day of service
with his employer he received a payment of £35,000. The
payment was made up as follows:
| 1 months salary | £1500 |
| 1 months salary in lieu of notice | £1500 |
| Holiday pay | £750 |
| Redundancy payment | £31,250 |
In these circumstances the first three items are relevant UK
earnings. In addition £1,250 of his redundancy payment is also
relevant UK earnings.
| Glossary ( RPSM20000000) |
