Are redundancy payments relevant UK earnings?
If you have been made redundant and as a result receive payments from your employer you should first establish exactly what the payments relate to. As well as the actual redundancy payment, the payments may be made up of items such as, for example, your usual wages or salary, a payment in lieu of notice and holiday pay. These will be relevant UK earnings. See RPSM05200060. However not all of your actual redundancy payment is treated as employment income. Any part of the redundancy payment which is below the £30,000 tax exempt threshold is not classed as employment income and does not count towards your total earnings received in the tax year of receipt. However any amount above the £30,000 threshold is classed as employment income and is also relevant UK earnings. Example John has been made redundant and on his last day of service with his employer he received a payment of £35,000.
