Redundancy Pay

Redundancy Pay

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A client company is making an employee redundant.   She's been there a lot less than two years (six or seven months), so she's not entitled to statutory redundancy pay. 

They are, however, going to make her an ex-gratia payment of about £300 - roughly one week's wage.  There's no contractual obligation to pay this - they're just doing it because they're nice people.

I'm thinking that this is not taxable.  Any thoughts ?

Replies (6)

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By stratty
21st May 2015 15:15

Sounds good

I think it would work but if you have any doubts at all I recommend speaking to ACAS.  They are great with this kind of advice.

Thanks (2)
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By King_Maker
21st May 2015 22:15

If non-contractual and not usual in the industry, then it should not be taxable (under £30,000).

Thanks (1)
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By LuKosro
22nd May 2015 00:19

Hi

Document it properly. Ex-gratia redundancy payments which are not taxed through PAYE are frequently challenged by HMRC. Not necessarily for this low amount though. 

Thanks (1)
RLI
By lionofludesch
22nd May 2015 11:03

Thanks everyone

Given the above replies and the modest size of the payment, we're going to run with it.

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By tom123
22nd May 2015 15:29

Presumably this is in addition to notice pay

Presumably any contractual notice pay will be taxed?

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RLI
By lionofludesch
23rd May 2015 08:37

Indeed

Yes

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