HMRC has recently published some high level guidance on tax on termination payments which can be a good place to start when it comes to employees understanding these rules. This guidance consists of three separate sections:

• what a termination payment is - including when an individual might receive a termination payment, and the elements it could include such as statutory redundancy pay, company benefits, payments in lieu of notice etc.
• what you pay tax and National Insurance on - including what elements may be tax free, and what happens if you don’t work your full notice period; and
• how tax and National Insurance are deducted.

The guidance also signposts individuals towards sources of HMRC support if they do not understand how they have been taxed, or think that their termination payment has been taxed incorrectly.

Other helpful sources of guidance for employees facing redundancy include the Low Incomes Tax Reform Group (LITRG) (for tax information) and Acas (for employment law and redundancy processes).