Being made redundant with a Termination payment

discontent64

Hope someone can advise.  I am fortunate that I am to receive a Termination award/payment of about £8000.  This plus the salary this year will not take me over the threshold to higher rate income tax. Is the lump sum essentially tax free and how do I declare it on a self-assessment form next year?  I have seen something on gov.uk that confused me in that only the compulsory/statutory amount is tax free.  Thanks

penners324

If it's an ex gratia/ redundancy payment then it's tax free. It doesn't get added on self assessment 

daveyjp

Termination award can cover different payments.

You need to know what the payment is for and this is usually documented in an agreement between you and employer.

If its pay in lieu of notice, holiday pay, bonus etc tax and NI will need to be paid and declared on self assessment.  If its a redundancy payment it will be tax free and won't be entered on self assessment.  It may be a mixture of both which is why documentation is important.

Undervalued

Basically, any compensation you get for the loss of your job (up to £30K) is normally tax free. However any payments that are a contractual right, such as notice pay and payment in lieu of untaken holiday are taxable.

discontent64

Thank you each for your useful comments, much appreciated.  The payment does not include notice pay, untaken holiday or payment in lieu.  Many thanks again.