Tax on £75,000 Redundancy Pay with an £80,000 Salary
The first £30,000 of a £75,000 redundancy payment is tax-free. The other £45,000 is taxed on top of an £80,000 salary, which costs £23,000 in Income Tax and leaves you £52,000.
| Redundancy payment | £75,000 |
| Tax-free part | £30,000 |
| Taxable part | £45,000 |
| Income Tax on the taxable part | £23,000 |
| Employee National Insurance on it | £0 |
| Redundancy you keep | £52,000 |
| Tax rate on the taxable part | 51.1% |
How this is worked out
You do not usually pay tax on the first combined £30,000 of statutory redundancy pay, enhanced redundancy and non-cash benefits. Anything above £30,000 is taxed as income. You pay no National Insurance on it; your employer pays Class 1A on the excess.
The taxable £45,000 sits on top of the £80,000 salary, so total income reaches £125,000. Above £100,000 the Personal Allowance falls by £1 for every £2, which is why the rate on this slice can exceed 40%.
Assumptions: the full salary and the payment fall in the same 2026-27 tax year, England, Wales or Northern Ireland bands apply, and no part of the payment is notice pay (payment in lieu of notice is fully taxable).
Sources: Tax on termination payments (GOV.UK), Income Tax rates and allowances (GOV.UK), Rates and thresholds for employers 2026 to 2027 (GOV.UK)