Child Benefit and Redundancy

I have just been made redundant. Neither my wife nor I will earn over the £60,000 this tax year. But is my redundancy payment, which would take me over the £80000, included in the total for net income for the year meaning we can't claim child benefit evn if I earn nothing more this tax year?

Hi Steve,
You would need to check if the redundancy payment is taxable or not to see what would be included in your adjusted net income:
 Redundancy: your rights.
Thank you.

Thank you. The first £30000 is tax free, after that it will all be taxed subject to nomal PAYE rates and will be taxed by my company before I get it. Hope that helps

Hi,

As the first £30,000 of your redundancy payment will be tax free, it will not be added to your adjusted net income. As such, your adjusted net income will be £50,000, excluding any other income, so you should still be able to claim Child Benefit.

Thank you.

Hi, I have the same query and the above answer isn’t clear. I earn circa £68k per year prior to pension deductions in my current role. I received a redundancy payment from my ex employer in May of £30k of which was taxed appropriately under PAYE. My question - should I count the redundancy payment towards my income this year ? which would mean that the Higher Income Benefit charge applies, as it would put me over £80k for the year.

Presumably anything over that £30000 tax free on the redundancy payment would be added to net income though? So for example if my redundancy payment were a total of £60000 with £30k taxed and £30k not taxed then £30k (less tax paid) does get included as net income and therefore that would take our combined income over the £80000? Correct? Or are HMRC generous enough not to include taxed redundancy as net income? Many thanks

Hi Steve Whitehead

The taxable element of the lump sum payment would be included. 

Thanks

Hi joe271190,
You would only include the taxable element of the lump sum payment when calculating your adjusted net income.
Please see guidance here:
Personal Allowances: adjusted net income
Thank you. 

Hi, I still don’t think that is right. Basically out of my £30k redundancy payment -£25k was taxable, so your advice is to take said £25k and add that as income to my current salary of £68k which would mean I would not be eligible for child benefit ?? Also I have followed the guidance link and whilst income covers salary; rental income; bonds; interest from savings etc it doesn’t state redundancy payment. Thanks

Hi joe271190

Adjusted net income is total taxable income before any Personal Allowances and less certain tax reliefs please take a look at Personal Allowances: adjusted net income.
You can also contact HMRC direct to review Income Tax: general enquiries

Thank you

Hi, This is still incredibly confusing and incredibly vague. On The link sent (twice now with no further advice or clarity ) redundancy is not mentioned at all, nor does it apply to any of the three examples provided on the link. My redundancy payment has already been taxed heavily through PAYE. I simply want to know whether to add the sum left over after tax to my current salary this year and if it now discounts me from claiming child benefit. Just a straight forward yes or no would be appreciated. Thanks

I couldn't agree more Joe. II am reading it now that taxed redundancy pay does count as personal income (in which case I am above the threshold for claiming Child Benefit). But it would be so much more simple if this were made clear initially when working out personal net income because as you said Redundnacy payments are not mentioned anywhere.

Totally agree Steve. I have just re read the advice you were given and seems to contradict itself several times. You will also notice my post has now went 7 days without reply. There are 3 example scenarios given on the link and none even remotely mention redundancy.

This is still incredibly confusing and incredibly vague. Can I please get a reply?

Hi joe271190,

Redundancy payments of up to £30,000 are usually non taxable. You can see guidance here:

Tax on termination payments

If you would like us to check to see if you have been overtaxed on your redundancy payment, and advise you further on how to reclaim this tax, please contact our Self Assessment team.

Self Assessment: general enquiries

If it transpires that the £25,000 is taxable, then yes, you would add this sum to your current salary for the year.

Thank you.

Hi, I have the same query and the above answer isn’t clear. I earn circa £68k per year prior to pension deductions in my current role. I received a redundancy payment from my ex employer in May of £30k of which was taxed appropriately under PAYE. My question - should I count the redundancy payment towards my income this year ? which would mean that the Higher Income Benefit charge applies, as it would put me over £80k for the year.

Hi, The question isn’t is the redundancy taxable, the question was do we add it to Income in year. As HMRC took over 3 weeks to reply, I phoned the self assessment line, eventually an andvisor stated that ‘Golden Handshake’ payments should not count towards Income for the purposes of claiming child benefit. Can HMRC confirm this please?

Hi Joe271190,
Please follow the guidance at Child Benefit tax calculator
Thank you

Hi, this response is absolutely very poor on HMRCs part. The entire thread on this forum is about how unhelpful and not clear the links are. I called HMRC, who eventually an advisor informed me redundancy falls under “golden handshake” and this is not subject to counting as income for the purpose of claiming child benefit. This was advice given verbally and now I am simply asking HMRV to confirm in writing for my benefit and the benefit of others reading this thread and you can’t even do that. Can you please confirm redundancy is golden handshake and should not be counted towards income for the purposes of calculating child benefit?!

Hi sakeden,
As the first £30k of your Redundancy Payment is tax free, it should not affect your Adjusted Net Income.
Any amount received over the £30K limit would be classed as taxable income, and affect your ANI accordingly.
If you have paid any tax on your £30K redundancy payment, and would like us to check if you are entitled to a rebate, contact us here:
Income Tax: general enquiries
Thank you.