Workers fired on the spot could lose a fifth of their redundancy payout to the taxman under new rules hidden in the Autumn Statement

Published: 04:55 EST, 7 December 2016 | Updated: 10:11 EST, 7 December 2016

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Workers who are fired on the spot could lose nearly a fifth of their redundancy payout to the taxman under new rules buried in last month's Autumn statement.

Currently, employees do not have to pay income tax or national insurance if their redundancy pay is under £30,000.

But from 2018 workers who receive a bigger payout because they've been given no warning that their job is being cut — payment in lieu of notice — will have to pay income tax and national insurance on this award.

Buried: Workers who are fired on the spot could lose nearly a fifth of their redundancy payout to the taxman under new rules buried in last month's Autumn statement

A basic rate taxpayer given £10,000 after losing their job — a £5,000 standard payout and £5,000 in lieu of notice — will lose £1,600 to the taxman under the changes, according to figures by accountancy firm Deloitte.

Currently, they get the full £10,000.

WHAT CAN YOU DO?

Redundancy can be unexpected and leave people questioning what to do with a lump sum of cash they receive.

A previous article we ran came from a reader looking at receiving a redundancy payout of £45,000 and was after advice as to what to do with it.

This is Money also has a redundancy calculator to help crunch numbers in order to see what workers are entitled to. It reveals the minimum legal payment an employer must make when making staff redundant.

It is based on those aged 22 to 41, who are legally entitled to a one week's pay for every year. You can use it here: Redundancy payout calculator