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A statutory redundancy payment made pursuant to ERA 1996 is exempt from tax under the general provisions charging income tax on earnings (ITEPA 2003, s 62)¹, but is taken into account as a payment on termination of employment (ITEPA 2003, s 401)². See also Appellant v Insp of Taxes³, where a lump sum paid to a former employee for withdrawing an appeal to an industrial tribunal, and a lump sum paid to the employee for taking voluntary redundancy, were together held to be taxable under what is now ITEPA 2003, s 401. Lump sum payments made under non-statutory schemes, whether instead of or in addition to statutory redundancy pay, also fall within this ITEPA 2003, s 401⁴. This applies both to payments under a standing non-statutory scheme and to payments under ad hoc schemes set up to deal with a specific situation. This includes:

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