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

Trusts and Inheritance Tax

Gifts out of surplus income

Gifts out of surplus incomeA valuable exemption from inheritance tax (IHT) applies to gifts out of surplus income. This exemption applies only to lifetime gifts and is therefore a key part of lifetime planning. The exemption applies to both outright gifts and gifts into trust. Gifts which meet the

14 Jul 2020 11:48 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more Read more
Trusts and Inheritance Tax

BPR ― trading and investment businesses

BPR ― trading and investment businessesIntroductionThe basic qualification rules for business property relief (BPR) are illustrated in the Flowchart ― trading or investment business for BPR purposes.For an overview of BPR, see the BPR overview guidance note.Relevant business propertyThe main

14 Jul 2020 15:36 | Produced by Tolley Read more Read more
Value Added Tax

Exemption ― overview ― items exempt from VAT in the UK

Exemption ― overview ― items exempt from VAT in the UKVAT exemption: list of supplies exempt from UK VATThe goods or services that are exempt from VAT are listed under various group headings within VATA 1994, Sch 9, Pt II.It is important to remember that not all supplies that come within a heading

14 Jul 2020 12:45 | Produced by Tolley Read more Read more