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is non-statutory redundancy pay taxable

Two employees have been made redundant - one with several years service so qualifies for stat redundancy pay - ok no problems in processing that but the second employee has only been here for a year and therefore does not qualify.  No redundancy package in the contract of employment.  The boss wants to make a redundancy payment as a gesture of goodwill - say £500 - is this taxable/NIiable - can't find a definitive answer and need to run the final payroll.  I interpret that as a normal payment - help!

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In general, no. But it depends...

If it's genuinely redundancy pay, then there's no NI and (for payments up to £30,000) no PAYE due. But if it's pay in lieu of notice, then it's subject to both NI and PAYE.

Have a look at CWG2 page 96. It's a bit more user-friendly than the Employment Income Manual - and there are some useful tables on pages 97-99 which work through the NI and PAYE treatment for different types of payment.

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Thank you...............

both for your help - I always go around in circles when I start looking at HMRC!

 

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