Work out what you are actually owed — statutory redundancy pay on the April 2026 limits, and what lands in your bank once notice pay, holiday and the £30,000 exemption are all accounted for.
Your age and your length of service are both counted on these dates, so a birthday or work anniversary a few days away can genuinely change what you are owed.
Statutory redundancy uses your average weekly pay over the 12 weeks before your notice date — including regular overtime you were contractually required to work.
Northern Ireland sets its own statutory redundancy limits, and Scotland its own income tax rates — both change the answer.
Contractual or enhanced redundancy, or an ex-gratia sum in a settlement agreement.
Payment in lieu of notice. This is the part that is always taxed — it never gets the £30,000 exemption.
Salary from 6 April up to your last day. Leave at 0 and we will estimate it from your pay and leaving date.
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Statutory redundancy pay is a formula, not a negotiation. It multiplies three things: how long you have worked somewhere, how old you were during those years, and a week of your pay. Half a week for each full year worked while you were under 22, a full week for each year while 22 to 40, and a week and a half for each year while 41 or over — counting only the most recent 20 years.
The part that catches people out is the fourth number, the one that is not yours. For redundancies on or after 6 April 2026 a “week’s pay” is capped at £751 in Great Britain and £783 in Northern Ireland, no matter what you earn. Anyone on more than roughly £39,000 a year is having their redundancy worked out on a fraction of their real salary, and the higher your pay the wider that gap gets: someone on £70,000 is paid as though they earned £39,052. The statutory maximum, for someone with 20 or more years all served after 41, is £22,530 — £23,490 in Northern Ireland. That ceiling is the reason enhanced redundancy is the thing worth negotiating, and why the cap deserves to be the first thing you understand rather than a footnote.
Redundancy money is taxed under its own regime, and it is genuinely favourable — but only for the right parts of the package. The first £30,000 of a genuine redundancy payment, statutory and enhanced together, is free of income tax. Better still, employees have an unlimited National Insurance exemption on termination payments: you pay no NI on redundancy pay at all, not even on the part above £30,000 that does attract income tax. Your employer pays Class 1A on that excess; you do not. Plenty of online calculators apply National Insurance to the whole package and quietly understate what you will receive.
The exception is the money that is not really redundancy. If you are paid instead of working your notice, that is post-employment notice pay, and HMRC treats it as ordinary earnings: full income tax, full employee National Insurance, and no share of the £30,000 exemption. Untaken holiday and outstanding wages are the same. Two packages of identical headline value can therefore be worth noticeably different amounts, depending on how much of each is notice rather than redundancy.
If part of your package sits above £30,000, ask your employer to pay that part straight into your pension rather than to you. An employer pension contribution made on termination is not taxed at all, so the whole amount arrives in your pot instead of reaching your bank account with income tax already deducted. It has to be agreed before the payment is made — receiving the money and paying it in yourself does not get the same treatment. Our pension tax relief calculator puts a number on it.
Two dates are worth checking before you agree to anything. Service is reckoned backwards from your last day in complete 12-month blocks, so a work anniversary falling just after your leaving date can cost you a full year’s entitlement. And the higher 1.5-week rate only applies to years in which you were 41 throughout — the year you turn 41 in is paid at the standard rate. Both are worth raising if the leaving date has any flexibility in it.
Finally, a settlement agreement only becomes binding once you have taken independent legal advice on it, and employers normally contribute to that cost. Acas and Citizens Advice both give free advice on redundancy, and the government’s Redundancy Payments Service pays statutory redundancy directly if your employer is insolvent.
Statutory redundancy pay is worked out from three things: how long you have worked there, how old you were during those years, and your weekly pay. You get half a week’s pay for each full year worked while under 22, one week’s pay for each full year while 22 to 40, and one and a half weeks’ pay for each full year while 41 or over. Only the most recent 20 years count, and a week’s pay is capped at £751 in Great Britain (£783 in Northern Ireland) for redundancies on or after 6 April 2026. That puts the maximum statutory payment at £22,530, or £23,490 in Northern Ireland.
Almost always the weekly pay cap. Statutory redundancy treats a week’s pay as no more than £751 however much you actually earn, so anyone on more than about £39,000 a year is having their payment worked out on a fraction of their real salary. Someone on £70,000 with 15 years’ service is paid as though they earned £39,052. The cap is also why enhanced redundancy is the thing worth negotiating: your employer can pay above the statutory minimum, and the first £30,000 of the whole package is tax free.
Not on the first £30,000. Genuine redundancy payments — statutory and any enhanced or ex-gratia amount — are free of income tax up to £30,000 in total, and anything above that is taxed at your normal rates. Statutory redundancy pay on its own can never reach the threshold, because its maximum is £22,530, so any taxable excess always comes from the enhanced part.
No. Employees have an unlimited National Insurance exemption on termination payments, so you pay no NI on redundancy pay however large it is — even on the part above £30,000 that does attract income tax. Your employer pays Class 1A National Insurance on that excess, but you do not. This catches a lot of calculators out, which apply NI to the whole package and understate what you actually receive.
Yes, and this is the part that surprises people. If you are paid instead of working your notice, that money is post-employment notice pay and it is treated as normal earnings: full income tax and full employee National Insurance, with no share of the £30,000 exemption. Untaken holiday and any unpaid wages are the same. So two packages of identical size can produce very different amounts in your bank account depending on how much of it is notice.
If part of your package sits above £30,000, ask your employer to pay that part directly into your pension instead of to you. An employer contribution made on termination is not taxed at all, so the whole amount lands in your pension rather than arriving in your bank account with income tax already taken off. It has to be arranged with the employer before the payment is made — you cannot get the same treatment by receiving the money and paying it in yourself. Our pension tax relief calculator shows what that is worth.
The most recent 20. If you have worked somewhere for 30 years, the first 10 do not add anything to the statutory calculation. Service is reckoned backwards from your last day in complete 12-month blocks, so a work anniversary a few days after your leaving date can cost you a whole year’s worth — it is worth checking whether the date is negotiable.
The higher one-and-a-half-week rate only applies to years in which you were 41 for the whole year. The law counts “each year of employment in which the employee was not below the age of 41”, reckoning backwards from your last day, so the year you actually turn 41 in is paid at the standard one-week rate. Our calculator handles this properly; several online ones do not.
Not for statutory redundancy pay — that needs two years of continuous employment. You may still be owed notice pay and payment for untaken holiday, and a contractual redundancy scheme can pay out from day one, so check your contract or staff handbook. You also keep the right not to be selected for redundancy for a discriminatory reason regardless of how long you have been there.
The redundancy formula is the same across the UK, but two things differ. Northern Ireland sets its own limits — £783 a week and a £23,490 maximum, both higher than Great Britain’s. And Scotland sets its own income tax rates, which changes what you keep of any part of the package that is taxable, such as notice pay or an enhancement above £30,000. The calculator above accounts for both.
Normally on your last day or on the next regular payday, though a settlement agreement may set a different date. You have six months from the date your job ends to make a claim to an employment tribunal if your employer does not pay. If your employer is insolvent you can claim statutory redundancy pay from the government’s Redundancy Payments Service instead.
Free, independent and expert:
A settlement agreement is only legally binding once you have taken independent legal advice on it, and the employer normally pays a contribution towards that cost. Never sign one before you have.
If part of your package is taxable, moving it into your pension is usually the single biggest saving available — see what it is worth.
