Statutory redundancy pay

Produced by Tolley in association with

Employment Tax

Guidance

Redundancy payments fall into two categories: statutory payments and non-statutory payments. Statutory redundancy is the amount which must be paid by the employer to the employee under employment law and will be a fixed amount for each year of service. Statutory redundancy pay is usually exempt from tax.

For more on non-statutory redundancy pay, see the Non-statutory redundancy pay guidance note.

HMRC guidance is at EIM13760 onwards. See also Simon’s Taxes E4.824 and E4.802F.

Employment law obligations

An employee is entitled to a statutory redundancy payment if they are made redundant after being continuously employed by the employer for at least two years.

The statutory redundancy payment is calculated by reference to the employee’s age, length of service and gross weekly pay. The amount of a week’s pay is subject to a statutory maximum cap which is reviewed each year:

Tax year

Maximum amount

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Sue El Hachmi

Senior Associate at Osborne Clarke

Sue advises on the design and implementation of employee incentive arrangements for private and public companies, including all types of tax-advantaged plans and bespoke arrangements for senior executives and management. Sue also advises on the incentive-related aspects of corporate transactions and has experience of private equity transactions and public company takeovers, flotations and demergers. Sue is a member of the Share Plan Lawyers Group and a member of the UK BioIndustry Association Finance and Tax Advisory Committee.

Popular Articles

Employment Tax

Company cars

Company carsIntroductionCompany cars are one of the most common taxable benefits. The rules for calculating the benefit are complex, and the reporting requirements are more onerous than most benefits. Company cars are covered by very specific legislation. Detailed guidance on each of the following

14 Jul 2020 11:15 | Produced by Tolley Read more

Owner-Managed Businesses

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more

Corporation Tax

Premiums on the grant or surrender of a lease

Premiums on the grant or surrender of a leasePremiums on the grant of a lease ― outlineWhen a property investor grants a lease, potentially this could be done on the basis that the tenant pays a premium for the initial grant of the lease, in addition to also paying rent over the term of the lease.

14 Jul 2020 12:58 | Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax Read more

��˾��ҹ��