A redundancy payment is taxable income, so you need to pay income tax on it.
Your employer should deduct the tax and pay it on your behalf. If they do not, then you'll be responsible for paying that tax yourself.
After the end of the tax year
At the end of the tax year we work out if you've paid the right amount of tax. Either we'll automatically assess your income tax, or you'll need to file an IR3 return.
If you're made redundant during the tax year, it may turn out that you've:
- paid too much tax and are due a refund
- have not paid enough tax and have some more to pay.
This depends on what entitlements you qualify for, and how you were taxed during the year.
If you cannot pay a tax bill
If you have a tax bill that you cannot pay in full, we can help you. Contact us as soon as you can to discuss your options, which include paying off the bill in instalments.