Is payment in lieu notice part of the tax-free redundancy pay or ETP-Type R?

 Author: AdaJiang2024(Newbie)Newbie

25 July 2024

Hi,

I have a question about whether the tax-free limit for redundancy pay can cover the payment in lieu of notice.

As an example, we need to pay one staff the below parts for his redundancy:

• 4 weeks' payment in lieu of notice (this is also applicable under other circumstances e.g. dismissal)
• 4 weeks' redundancy pay (under the tax-free cap)
• Unused annual leave

Should we report the whole payment in lieu of notice as ETP-Type R as it's not part of the tax-free redundancy pay? My understanding is if it's not provided just for redundancy, then it shouldn't become part of the tax-free redundancy pay.

Thanks.

Emma

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