Is Redundancy Pay Taxable
The good news is that the first £30,000 of a redundancy payment is tax free.
Everything over £30,000 is then taxed at your highest rate and will usually be deducted under Pay As You Earn. You will pay tax on your wages as well as pay in lieu of holiday and any bonus payments.
Do I pay tax on my wages?
Yes, you will still pay tax on any of your unpaid wages as normal, but not on the separate redundancy payment. You will also pay tax on any bonus you receive and on your occupational pension.
Will I still have to pay National Insurance on my Redundancy Pay?
Yes, you will still pay your national insurance on your unpaid wages and any bonus payments but not on your occupational pension. You will not pay any on your redundancy payment