Solution Properties
Solution ID:
222001000101536
Last Modified Date:
Wed Jan 03 11:55:40 UTC 2024
Taxonomy Path:
Case category//How do I...//processing
Author:
[email protected]
Set up a redundancy payment
Description

Employees made redundant only pay tax on payments over £30,000.

They do not pay any National Insurance.

Tax and National Insurance deducts from other termination payments.

For example, payment instead of holiday or notice.

Read the HMRC article Making staff redundant (opens in new tab).

 TIP: Check if the payment is subject to pension or attachment of earnings orders. For more information, please refer to HMRC or your pension provider.

Cause
Resolution

Set up a redundancy payment that isn’t subject to tax or NI (less than £30,000)

  1. Go to Settings. Select Payments & Deductions.
  2. Select Create New Payment.
  3. Enter the following information:
    Payment Category Select Redundancy.
    Payment Type Select Non-taxable redundancy. 

     
    Name

    Enter a name for the payment if required. This appears on the employee’s payslip to identify the payment.
    Description Enter explanatory text about the payment. This won't show on the payslip.
    Include in Calculation of There are two options available:
  4. Select Save.

Set up redundancy payment subject to tax and NI (over £30,000)

 NOTE: This is for the portion of the payment over £30,000. For example, the full redundancy is £40,000, this payment is £10,000. 

  1. Go to Settings. Select Payments & Deductions.
  2. Select Create New Payment.
  3. Enter the following information:
    Payment Category Select Redundancy
    Payment Type Select Taxable redundancy.

     
    Name

    Change the name of the payment if required. This name appears on the employee’s payslip to identify the payment.
    Description Enter explanatory text about the payment. This won't show on the payslip.
    Include in Calculation of There are two options available:
  4. Select Save.

Process an employee’s redundancy pay

  1. Make the employee a leaver.
  2. Process the pay run up to the Edit Pay stage.
  3. Select the required employee.
  4. Select Add Payment.
  5. Choose the redundancy payments you need.
  6. Enter the value in the Rate box.
  7. Complete the rest of your pay run as normal.

When you finish processing the current pay run, you must continue the leaver process.

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