Increase the £30,000 tax-free limit on settlement agreements

Background

The £30,000 tax-free limit on settlement and redundancy payments has not increased since 1988. We think it should be raised to reflect inflation and indexed each year, to ensure fair treatment for workers facing job loss or redundancy.

Additional details

We ask the Government to: Increase the tax-free limit from £30,000 to a fair, inflation-adjusted level. Automatically index the threshold to inflation each year. We think this change would restore fairness, support people through job loss, and reduce the tax burden on those already under financial and emotional stress.

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