Is Redundancy Pay Taxed If I Get a New Job Straight Away?
Updated July 2026 · 4 min read · Free calculator inside
No — finding a new job straight away does not affect the tax treatment of your redundancy pay. The first £30,000 of a genuine redundancy payment is tax-free regardless of what you do next, including starting a new job the very next day.
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Open the Redundancy Pay Calculator →The £30,000 exemption is about the payment, not your employment status
HMRC's £30,000 tax-free threshold applies to the redundancy payment itself, based on it being compensation for loss of employment — not on you remaining unemployed afterwards. Whether you are out of work for six months or start a new role on Monday, the same tax-free treatment applies to a genuine redundancy payment.
What this does NOT cover
- Anything above £30,000 is still taxed as income at your normal rate, regardless of your new job status.
- Pay in lieu of notice (PILON), unpaid wages and accrued holiday pay are taxed as normal income and are separate from the £30,000 exemption.
- If your new job starts in the same tax year, your redundancy payment and new salary are simply both added to your income for that tax year when working out your overall Income Tax — the redundancy exemption itself does not shrink because of the new job.
A common misconception
Some people believe redundancy pay becomes taxable if you are re-employed quickly, perhaps confusing it with unemployment benefit rules. There is no such rule for redundancy pay — the £30,000 exemption is a fixed feature of a genuine redundancy payment and does not depend on your subsequent employment.
Frequently Asked Questions
Do I have to tell HMRC I got a new job after redundancy?
Your new employer will collect tax through PAYE using your tax code as normal. You do not need to inform HMRC specifically about the redundancy payment — your employer reports it, and the £30,000 exemption is applied automatically by your former employer's payroll.
Does redundancy pay affect my tax code at my new job?
It can temporarily, if the redundancy payment and new salary land in the same tax month and push your income unusually high, similar to a large bonus. Any overpaid tax is generally corrected automatically over the rest of the tax year.
Is redundancy pay taxed differently if I retire instead of getting a new job?
No — the tax treatment of the £30,000 exemption is the same whether you retire, take time off, or start a new job immediately. It depends on the nature of the payment, not what you do afterwards.
Work out your redundancy entitlement
Skip the maths — get an instant, up-to-date figure with our free calculator.
Open the Redundancy Pay Calculator →Related Guides
How Much Redundancy Pay Am I Entitled To?
A 2026 guide to UK statutory redundancy pay: who qualifies, the age-based formula, the £751 weekly cap, the 20-year limit, and how the first £30,000 is tax-free.
How to Calculate Your Take-Home Pay in the UK
Work out your UK take-home pay for 2026/27 — income tax bands, the £12,570 personal allowance, National Insurance, and what actually lands in your bank account.
⚠️ Disclaimer: This guide is for general information only and does not constitute financial, tax, or legal advice. Rates and thresholds can change — always check the latest figures on GOV.UK and consult a qualified professional before making decisions.