Skip to main content
2026/27 Tax Year

Redundancy Pay and Tax Calculator

Use this to separate the pieces of a redundancy package: statutory redundancy pay, any extra severance, taxable notice pay, and the amount you may actually keep once tax and employee NI have landed on the taxable bits.

Current cap: for redundancies on or after 6 April 2026, statutory redundancy pay uses a weekly pay cap of £751, with a maximum statutory amount of £22,530.

Your package

Enter the taxable notice/PENP amount separately if you know it. This keeps the tax-free severance calculation cleaner.
Estimated net package received
£0 Gross package entered: £0
Statutory redundancy pay£0
Tax-free redundancy element£0
Estimated employee Income Tax on taxable parts£0
Estimated employee NI on taxable wages£0
Student loan on the taxable parts£0
Weekly pay used for statutory calculation£0
Severance above the £30,000 tax-free slice£0
Taxed as wages£0

What this means

Statutory redundancy pay sits inside the general £30,000 tax-free termination-payment slice. Notice pay and holiday pay do not: they behave like normal taxable wages.

My scenarios

Worked examples — see the math on real numbers

How statutory and enhanced redundancy payments are taxed in 2026/27, including the £30,000 tax-free threshold.

Daniel — 8 years' service, age 42, £45,000 salary

Years of service8
Age bracket22-40 (1 week per year)
Statutory redundancy8 × £751 (capped weekly) = £6,008
Enhanced redundancy from employer£20,000
PILON (pay in lieu of notice)£3,750
Total payment£29,758

The math:

  1. PILON is fully taxable as normal earnings: £3,750 added to salary, taxed at marginal rate
  2. Statutory + enhanced redundancy: £26,008 — entirely under the £30,000 threshold
  3. Tax-free element: £26,008
  4. Taxable element of redundancy: £0
  5. Only the PILON is taxed at 20% basic-rate: £3,750 × 20% = £750

Result: Daniel keeps £29,008 of his £29,758 total payment — only the PILON triggers tax. Statutory and enhanced redundancy under the £30,000 cap are tax-free.

Helen — 15 years' service, age 50, £75,000 salary

Years of service15
Statutory redundancy (age 41+, 1.5 weeks/year)15 × 1.5 × £751 = £16,898
Enhanced redundancy from employer£35,000
PILON£12,500
Total redundancy package£64,398

The math:

  1. PILON fully taxable: £12,500 added to salary, taxed at her marginal rate (40%) = £5,000 tax
  2. Total redundancy element: £51,898 (£16,898 + £35,000)
  3. Tax-free £30,000 threshold applied
  4. Taxable redundancy: £51,898 − £30,000 = £21,898
  5. Taxed at 40% (already in higher-rate band): £21,898 × 40% = £8,759

Result: Helen pays £13,759 total tax on her £64,398 payment, keeping £50,639. She should consider a salary-sacrifice pension contribution from her final salary to claw back some of the higher-rate exposure.

Figures use 2026/27 UK tax-year rates and thresholds. Always verify against your specific payslip or tax statement before acting.

Editorial accountability
Open Trust Centre →

Every page is reviewed against the editorial standards, written from primary sources, sourced openly, and corrected publicly. No affiliate revenue. No sponsored content. No paid placements.

Editorial standards Editorial process Corrections policy How we make money Editorial team Methodology

What this page is modelling

The redundancy part of a package and the wage-like part need separating. Statutory redundancy pay and most additional severance sit inside the first combined £30,000 tax-free slice. Notice pay, PILON, PENP, holiday pay and unpaid wages are usually taxed as normal earnings.

Sources and assumptions

GOV.UK statutory redundancy pay rules GOV.UK tax on termination payments HMRC income tax rates and allowances

This calculator uses the rules for redundancies on or after 6 April 2026, including the £751 weekly cap. It does not try to replicate payroll-period quirks or every PENP edge case.