Statutory redundancy pay

Copyright © 2025 LexisNexis
Produced by Tolley in association with Sue El Hachmi of Osborne Clarke LLP
Employment Tax
Guidance

Statutory redundancy pay

Copyright © 2025 LexisNexis
Produced by Tolley in association with Sue El Hachmi of Osborne Clarke LLP
Employment Tax
Guidance
imgtext

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 yearMaximum amount

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
TAKE A FREE TRIAL NOW
Sue El Hachmi
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.

Read moreRead more
Powered by Tolley+™
  • 25 Nov 2025 10:48

Home/ Tolley Tax Guidance/ Employment Tax / Ending employment

Popular Articles

Owner-Managed Businesses

Bad debts

Bad debtsBad debts usually arise where goods or services have been provided to a customer, for which payment has not been received within a reasonable or specified time period, or for which the customer is unable to pay. It is necessary to determine the quantum of relief that can be claimed for bad

14 Jul 2020 15:34 | Produced by Tolley Read more Read more
Owner-Managed Businesses

Special rate pool and long life assets

Special rate pool and long life assetsSpecial rate poolExpenditure on some types of plant or machinery must, if neither annual investment allowance (AIA) nor first year allowances (FYAs) are available, be allocated to a ‘special rate pool’. Expenditure to be allocated to the special rate pool

14 Jul 2020 13:41 | Produced by Tolley Read more Read more
Corporation Tax

Taxation of loan relationships

Taxation of loan relationshipsThe vast majority of companies will have loan relationships and so will need to consider how they are taxed under the loan relationship rules. There are also specific provisions dealing with relevant non-lending relationships and other deemed loan relationships.

14 Jul 2020 13:48 | Produced by Tolley Read more Read more