Where to Put Redundancy Pay on Your Tax Return

On a Self Assessment return, redundancy pay goes on the SA101 Additional Information pages, not the SA102 Employment pages. The tax-free portion covered by the £30,000 exemption goes in box 9, any amount above £30,000 goes in box 5 along with taxable post-employment notice pay, and tax already deducted from that excess goes in box 6.¹ Putting these figures on the Employment pages instead is one of the most common filing errors with termination payments.

The Three Boxes That Handle Redundancy Pay

The SA102 Employment notes are explicit that employment lump sums, compensation, and deductions belong on page Ai 2 of the Additional Information pages, boxes 3 to 10.² If you file online, the SA101 sections are not included by default; you need to tick the box requesting the Additional Information supplementary pages when setting up your return, or the relevant boxes will not appear.

Three boxes do the work for a standard redundancy payment:¹

Box 5, taxable amount. Enter the portion of your redundancy payment that exceeds the £30,000 exemption, plus any taxable post-employment notice pay.
Box 6, tax already deducted. Enter tax your employer took from the amount in box 5 through PAYE, but only if you have not already included that tax in box 2 of the SA102 Employment page. Do not enter it in both places.
Box 9, exempt amount. Enter the portion of your redundancy payment covered by the £30,000 exemption.

Wages, salary, holiday pay, and bonuses do not go in these boxes. They belong on the SA102 Employment page through box 1, taxed as ordinary earnings.

If Your Redundancy Pay Is £30,000 or Less

When the whole payment falls within the exemption and there is no post-employment notice pay, box 5 stays blank and the full amount goes in box 9. A £10,000 redundancy payment would appear as £10,000 in box 9 and nothing in box 5.¹

If Your Redundancy Pay Exceeds £30,000

HMRC’s worked example: a £40,000 total termination package that includes £1,000 of taxable post-employment notice pay. Box 5 shows £10,000 (the £1,000 PENP plus the £9,000 above the exemption), box 6 shows the tax already taken off, and box 9 shows £30,000.¹ Box 9 tells HMRC you have legitimately claimed the exemption; box 5 shows what is taxable.

Once the numbers are in, cross-check them against your settlement agreement. Box 5 plus box 9 should equal the total termination payment, excluding standard wages, holiday pay, and other earnings that sit on the SA102 Employment page. If the totals do not reconcile, something has been entered in the wrong place.

Splitting the Package: What Qualifies for the £30,000 Exemption

The £30,000 tax-free exemption applies only to genuine redundancy compensation. It comes from section 403 of the Income Tax (Earnings and Pensions) Act 2003, which treats a termination payment as taxable income only to the extent it exceeds £30,000.³ Anything above that limit is taxed at your normal income tax rate.

The threshold is a lifetime allowance per termination, not per payment. If your employer splits the redundancy into instalments, or you receive payments from more than one source connected to the same job loss, HMRC adds them together before applying the exemption.

Several common components in a termination package do not qualify and are taxed in full through PAYE as ordinary earnings:⁴

Pay in lieu of notice (PILON), whether contractual or discretionary.
Post-employment notice pay (PENP), calculated by statutory formula even when no PILON is labelled.
Accrued but unused holiday pay.
Unpaid wages and any bonuses triggered by your departure.
Restrictive covenant payments made in return for agreeing not to work for a competitor.

These sit on the SA102 Employment page, not on the SA101. Treating PILON as part of the £30,000 exemption is a common mistake, because PILON is taxable earnings rather than compensation for loss of employment.

The document that does the heavy lifting when you file is your settlement or compromise agreement. It should separate the tax-free redundancy element from PILON, holiday pay, and other taxable items. If your employer did not provide a clear breakdown, ask for one in writing before entering figures. Do not guess at the split. Your P45 shows total pay and tax deducted up to your leaving date but does not distinguish redundancy from wages, so it cannot answer this question on its own.

Post-Employment Notice Pay and Box 5

Post-employment notice pay is the part of a termination package that HMRC treats as a substitute for the notice period you did not work, even if neither you nor your employer called it PILON. The calculation sits in section 402D of the Income Tax (Earnings and Pensions) Act 2003.⁵

In simplified terms, the formula takes your daily basic pay, multiplies it by the number of days in your unworked notice period, and subtracts any PILON or other notice-related payments that were already taxed as earnings. The result is taxable employment income and belongs in box 5 of the SA101. If the calculation produces a negative number because the employer already paid and taxed more than the formula amount, PENP is treated as nil.

Your employer should have done this calculation and included the PENP figure in your settlement paperwork. If it is missing, ask for it. PENP is one of the areas HMRC most often picks up in reviews of termination payments, and the anti-avoidance rule in the same section lets HMRC override arrangements designed to reduce the PENP figure artificially.

Do You Actually Need to File a Return?

Most people who are made redundant never touch Self Assessment. If your employer applied the £30,000 exemption correctly and deducted the right tax through PAYE from everything else, the P45 figures should be accurate and HMRC already has what it needs.

You will need to file a return if:

You already file Self Assessment for another reason, such as self-employment, rental income, or earnings above £150,000. The redundancy details go on that return.
HMRC has sent you a notice to file.
Your employer got the tax wrong on the termination package and you need to correct the position, whether to pay what you owe or claim a refund.⁶
You had other untaxed income in the same tax year that pushes you into Self Assessment anyway.

If you have never filed before and need to register, tell HMRC by 5 October following the end of the relevant tax year.⁷ HMRC will issue a Unique Taxpayer Reference, which you need before filing online.

Mistakes That Cause the Most Trouble

Putting redundancy pay on the SA102 Employment pages. That page is for wages, salary, and benefits. Lump-sum termination payments belong on the SA101 Additional Information pages.²
Double-counting tax already deducted. If tax on the redundancy excess is already in box 2 of the SA102, do not enter it again in box 6 of the SA101.¹
Treating PILON as covered by the £30,000 exemption. PILON is earnings, not compensation for loss of employment.⁴
Forgetting to request the Additional Information pages when filing online. Without ticking that option, the boxes are not available.
Not reconciling box 5 plus box 9 against the redundancy total in your settlement agreement. If the numbers do not add up, at least one is in the wrong place.

If your return does not match what your employer reported, HMRC will write to you. Responding with your settlement agreement and P45 usually clears it up. Ignoring the letter can lead to HMRC estimating the tax owed themselves, and that estimate rarely works in your favour.

Filing Deadlines

Self Assessment follows the UK tax year ending 5 April. For the 2025–26 year, the deadlines are:⁸

Paper returns must reach HMRC by 31 October 2026.
Online returns must be submitted by 11:59 pm on 31 January 2027.
Any tax owed is also due by 31 January 2027.

Missing the 31 January deadline triggers an automatic £100 penalty, even if you owe no tax, with further penalties for continued delay. If you have never filed before, register by 5 October 2026 for a 2025–26 return so HMRC has time to issue your UTR before you file.⁷

1
GOV.UK. Other Taxable Income 2025 (HS325)
2
HM Revenue and Customs. SA102 Employment Notes 2026
3
legislation.gov.uk. Income Tax (Earnings and Pensions) Act 2003 Part 6 Chapter 3
4
GOV.UK. Tax on Termination Payments
5
legislation.gov.uk. Income Tax (Earnings and Pensions) Act 2003 Section 402D
6
MoneyHelper. Do You Have to Pay Tax on Your Redundancy Pay
7
GOV.UK. Check How to Register for Self Assessment
8
GOV.UK. Self Assessment Tax Returns – Deadlines