A genuine redundancy payment is one of the few payments from employer to employee that can escape tax despite being contractual (but see ¶422-060 for commentary on what constitutes a genuine redundancy payment). The way the exemption is granted is fairly circuitous, as follows:

a redundancy payment is not treated as taxable earnings (ITEPA 2003, s. 309(1));

similarly, it is not treated as taxable ‘employment income other than earnings’ (s. 309(3)) but, in this case, subject to an exception;

the exception is that it may be taxable under ITEPA 2003, Pt. 6, Ch. 2: Payments and Benefits on Termination of Employment, etc;

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