Solution Properties
Solution ID:
222001000101536
Last Modified Date:
Tue Dec 02 12:24:36 UTC 2025
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 don’t pay any National Insurance.

This means you may need to set up two different payments in payroll to process redundancy below and above the £30,000 threshold.

For more in information, read the HMRC article at gov.uk.

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

Cause
Resolution

Set up a redundancy payment

Under £30,000 (not subject to tax and NI)

▼Steps to create
  1. Select Settings from the menu bar and choose Payments and 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 and then Done.

Over £30,000 (subject to tax and NI)

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

▼Steps to create
  1. Select Settings from the menu bar and choose Payments and 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 and then Done.

Process an employees' redundancy pay

To assign the new payment to the employee, read Process an employees redundancy pay.

Steps to duplicate
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