Employers in Great Britain notified 50,904 proposed redundancies in September 2026, the most in a month since October 2020, while the tax-free limit on redundancy pay has not changed since April 1988. September's total is up from 19,557 in August, according to Insolvency Service management information published on October 5.
HR1 forms and the £30,000 threshold
HR1 forms — the statutory advance notification document that UK employers must submit to the government via the Redundancy Payments Service on GOV.UK whenever they propose collective redundancies — rose only from 282 to 353, although the figures may be revised and not every proposal ends in dismissal. For those let go, only the first £30,000 of statutory and enhanced redundancy pay combined is usually tax-free. Pay in lieu of notice and holiday pay are taxed as pay.
While Chancellor John Healey is set to deliver his first Budget on October 28, experts said there was no suggestion the allowance would change.
Experts call for an inflation-adjusted limit
Kate Underwood, founder and chief people strategist at Southampton-based Kate Underwood HR & Training, said: "Is £30,000 still the right line? Only if your rent is still at 1988 prices. It hasn't moved in 38 years. The limit is old enough to have been made redundant itself. Is it fair? Give a firm 25 years and you get a tax bill as a thank you. Join last year and you walk away clean. Link it to salary and the fat cats get the biggest break. Link it to years served, then index it so nobody forgets it for another four decades."
Tony Redondo, founder of Newquay-based Cosmos Currency Exchange, said: "As Clarkson asked (last week): 'Why would you start a business in the UK today?' The £30,000 tax-free redundancy limit was set 38 years ago. Adjusted for inflation, it would top £85,000 now. Enhanced packages routinely breach £30,000, turning relief into a tax bill. A frozen cap amid rising job losses is fiscal drag by stealth. The Treasury gains, redundant workers pay. It's manifestly unfair."
Impact on long-serving employees and mortgages
Nouran Moustafa, practice principal and Independent Financial Adviser at Roxton Wealth, said: "A redundancy payment is not a windfall. It is financial runway while somebody rebuilds their income. That is why a £30,000 tax-free limit unchanged since 1988 deserves serious scrutiny. A long-serving employee receiving a larger package can exceed it relatively easily, even though the money may need to replace months of salary. I would not frame that as newer workers being treated 'better'. The real problem is that the threshold has stood still while wages and living costs have moved enormously."
Ross Lacey, director of Rayleigh-based Fairview Financial Management, said: "The limit set in 1988 has been eroded by inflation, and it creates a cliff-edge for long-serving employees whose packages go over £30,000. We specialise in working with people going through redundancy and there are often merits in having some or all of the excess paid into a pension rather than taken as cash. This can help manage the immediate tax bill and improve retirement provision."
Stephen Perkins, Norwich mortgage broker and managing director of Norwich-based Yellow Brick Mortgages, said: "An at-risk redundancy letter can create a real problem during a mortgage application because lenders are assessing whether the income used to support the loan is likely to continue. The worst thing a borrower can do is stay silent and hope to complete before anything changes. Tell your broker and lender as soon as circumstances change so the case can be reassessed properly. That may mean a lower loan, a different lender or waiting until employment is clearer, but discovering the issue at the last minute risks a collapsed purchase and much bigger costs."
