How do I claim a tax refund after redundancy?

Redundancy can be a tough financial blow, and the last thing you want to do is leave money on the table. What many people don’t realise is that they could be owed tax refunds after redundancy. HMRC often applies emergency tax codes or deducts too much tax from redundancy payments, meaning you might have overpaid.

This guide will walk you through everything you need to know about claiming a tax refund, helping you get back what you’re owed. We’ll cover: 

• How redundancy pay is taxed

• When you might be due a tax refund

• How to claim your refund from HMRC

• Other tax considerations after redundancy

• What to do if you transition to self-employment

How is redundancy pay taxed?

What people often call their “redundancy pay” can contain several different payments. HMRC treats each element according to what the payment is actually for.

Statutory redundancy pay

Statutory redundancy pay is compensation for losing your job. You usually need to have worked continuously for your employer for at least two years to qualify for statutory redundancy pay.

Qualifying statutory redundancy pay forms part of the £30,000 tax-free termination payment allowance.

Enhanced or contractual redundancy payments

Your employer may pay more than the statutory minimum.

Qualifying additional severance or enhanced redundancy payments can also fall within the £30,000 exemption. The exemption applies to the combined qualifying termination payment, so you don’t receive a separate £30,000 allowance for each part.

Income Tax is normally due on qualifying termination payments above the combined £30,000 limit.

Notice pay and payment in lieu of notice

If you’re paid instead of working some or all of your notice period, that amount is generally treated as earnings.

This can include payment in lieu of notice, often shortened to PILON, and an amount known for tax purposes as Post-Employment Notice Pay (PENP).

These amounts are generally subject to Income Tax and National Insurance and don’t simply fall within the £30,000 redundancy exemption.

Holiday pay, unpaid wages and bonuses

Any outstanding salary, holiday pay and bonuses paid when your employment ends are normally taxed in the same way as employment income.

This is why looking only at the total amount on your final payslip can be misleading. Different parts of the payment can have different tax treatment.

Why might I get a tax refund after being made redundant? 

A redundancy doesn’t automatically mean you’ve overpaid tax.

A refund may be due when the total Income Tax deducted through PAYE is more than the tax you ultimately owe for the whole tax year.

One common situation is losing your job partway through the tax year and then earning less than expected during the remaining months.

For 2026/27, the standard Personal Allowance is £12,570 for most people. If your income falls after redundancy, some of your annual tax-free allowance may effectively remain unused, depending on your circumstances.

Another situation can arise if your employer makes a taxable payment after giving you your P45.

HMRC requires employers to use tax code 0T on a week 1 or month 1 basis for payments made after leaving. This means that payment is taxed without giving you Personal Allowance against it. The deduction can be correct at the time but still leave you having paid too much when your income for the full tax year is considered.

Does and 0T tax code mean I've definitely overpaid tax?

No.

A 0T tax code means no Personal Allowance is being given against that particular payment. HMRC specifically requires this treatment for taxable payments made by a former employer after a P45 has been issued.

Whether you’ve actually overpaid depends on your full tax-year position, including:

• how much you earned before redundancy

• how much Income Tax you’ve already paid

• taxable parts of your termination payment

• any new employment

• pensions

• taxable benefits

• self-employment income

• other taxable income

The tax deducted from one payment therefore can’t tell you on its own whether a refund is due.

How to claim your tax refund from HMRC after redundancy

The right route depends on what happens after your employment ends.

Step 1: Check your final pay and P45

Your employer should provide a P45 when you leave.

Your P45 records your pay and Income Tax up to the point you left the employment. If you later receive another payment from your former employer, you should also keep the written payment details showing the gross amount and deductions.

Keep:

• your P45

• final payslips

• details of your redundancy or termination payment

• details of any later payments from your former employer

• details of other income received during the tax year

Step 2: Work out which HMRC refund route applies

If you've been unemployed for four weeks or more:

You may be able to use HMRC’s P50 service to request an Income Tax refund during the current tax year if you’ve stopped working and meet its conditions.

HMRC says P50 may be appropriate if you’ve been unemployed for at least four weeks and aren’t claiming taxable state benefits, or if you don’t expect to return to work. You must have received your final pay before applying.

You will usually need information including your National Insurance number and P45 details.

If you’re starting another job within four weeks:

HMRC says you shouldn’t normally use P50 if you’re unemployed but expect to start another job within four weeks. Any repayment due may instead be made through your new employment.

Give your new employer your P45 where appropriate so the correct PAYE information can be used.

If you’re receiving taxable state benefits:

P50 isn’t normally the correct route if you’re receiving taxable state benefits. Jobseeker’s Allowance is taxable, for example, while Universal Credit is not subject to Income Tax.

Because benefits can change your overall tax position, check the specific HMRC route that applies to you.

If the tax year has already ended:

HMRC reconciles PAYE records after the end of the tax year and may issue a P800 tax calculation if you’ve paid too much or too little tax.

If your P800 says you’re due a refund and allows you to claim online, you can usually request the refund through HMRC’s online service, your Personal Tax Account or the HMRC app.

If you complete Self Assessment:

If you’re required to complete a Self Assessment tax return, HMRC says your termination payment should be included in the “additional information” section of the return. Any overall overpayment will then form part of your Self Assessment calculation.

Is form P53 used for a redundancy tax refund?

Usually, no. Form P53 is associated with refunds following certain small pension lump-sum payments, rather than being the standard form for getting Income Tax back after redundancy.

If you’ve stopped working, P50 may be relevant depending on what you plan to do next and whether you’re receiving other taxable income or benefits.

This distinction matters because using the wrong form can create unnecessary delays.

How long does a redundancy tax refund take?

There isn’t one standard processing time for every redundancy-related refund.

For P50 applications, HMRC currently says it may take 14 days to get a reply after it receives the completed request and advises customers not to contact them to check progress during that initial period.

That is a response timeframe rather than a guarantee that every refund will reach your account within 14 days.

If HMRC later sends you a P800 and you claim the refund online, GOV.UK says the money is normally sent within five working days after the online claim.

More complicated cases can take longer, particularly where HMRC needs further information.

What if I start working for myself after redundancy?

Redundancy is sometimes the point when people move from employment into self-employment.

If you begin working as a sole trader, you can start trading without registering immediately, but you must keep records from when you start. You generally need to register for Self Assessment as a sole trader if your gross trading income is more than £1,000 in a tax year.

If registration is required, the normal deadline is 5 October following the end of the relevant tax year.

Any self-employment income earned after redundancy can also affect whether you have genuinely overpaid tax for the year, so it needs to be taken into account before assuming a PAYE refund is due.

What about benefits after redundancy?

Benefits can affect both your income and the correct route for dealing with an Income Tax overpayment.

Jobseeker’s Allowance is taxable. Universal Credit isn’t subject to Income Tax.

If you’re receiving a taxable benefit, don’t assume P50 is appropriate. HMRC specifically excludes people claiming taxable state benefits from the usual P50 route.

A simple redundancy tax example

Suppose someone is made redundant partway through the tax year.

They receive:

• their final salary

• payment for unused holiday

• a qualifying redundancy payment below £30,000

The qualifying redundancy element may be tax-free, while the salary and holiday pay remain taxable.

If that person then has little or no further taxable income for the rest of the year, the Income Tax already deducted through PAYE could turn out to be more than their final liability.

That doesn’t mean everyone in the same position receives a refund. The result depends on their total income, tax code and other taxable income during the year.

Frequently asked questions about tax refunds after redundancy