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Tax and Redundancy Pay and Other Termination Payments

Report type
Consultation response
Issue date

At present, the first £30,000 of redundancy pay is exempt from tax, but other termination payments (like outstanding holiday pay or bonuses) are fully taxed. This document sets out the TUC's response to a government consultation on exempting these other payments but lowering the £30,000 threshold. The government has failed to set out who would win and who would lose from these changes, making it impossible for the TUC to support them. The TUC believes that the tax-free threshold should be raised, not lowered, as it has been frozen for nearly 30 years. The document also makes the case for reforms of statutory redundancy pay including raising the cap on weekly pay used to calculate maximum entitlements and abolishing the 20 year maximum. The TUC also believes that the right to statutory redundancy pay should not be limited to ‘employees’. This document also sets out proposals for improving workers’ entitlements in insolvencies.