Statutory Redundancy Pay

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The GOV.UK website gives detailed information about how to proceed when you need to make staff redundant, including a ‘Statutory Redundancy Pay’ calculator which will help you to determine the amount of redundancy pay that employee(s) are entitled to receive (Payroll Manager is not able to calculate this figure as it is based on a number of variables, some of which are not stored within the payroll data).

You should consult the Making Staff Redundant page of GOV.UK to determine the rules and amounts that will be paid before proceeding with the rest of this guide.

 

If the total redundancy payment for an employee is less than £30,000

  • Redundancy payments of less than £30,000 are not subject to tax and NIC. To enter these payments on Payroll Manager you will need to create a new column as below:
  • Go to the ‘Pay Details‘ screen and click on the ‘Additions‘ tab.
  • Click on the blue ‘spanner‘ symbol in the heading of the column furthest to the right hand side of the screen.blue spanner
  • Tick the ‘used‘ box for the next available column, change the description to ‘Redundancy‘ and un-tick the boxes marked Taxable, NIC-able and Pensionable (you will see a warning message advising you that this may affect all pay periods – it is safe to ignore this message by clicking ‘OK‘ as this column has only just been created.)non taxable column
  • Click ‘OK‘ to save these changes.
  • You will now see a new column on the ‘Pay Details’ screen labelled ‘Redundancy‘. Enter the relevant amounts into this column for each employee.non taxable amount

 

If the total redundancy payment for an employee exceeds £30,000

If the total redundancy payment for an employee exceeds £30,000 then that part of the payment that exceeds £30,000 is subject to tax (but not NIC). In such cases you should follow the steps above in order to enter the first £30,000 of the payment, and then create a further column (this time marked as ‘taxable’) in order to enter the addition amount.

e.g. if the redundancy payment for an employee was £45,000 (of which £30,000 is non taxable and £15,000 is taxable);

  • Create an additional column and mark it as ‘Taxabletaxable column
  • Enter the additional amount in the new column.taxable amount
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