UK Redundancy Pay Calculator 2026/27
Calculate UK statutory redundancy pay for 2026/27 plus the tax on enhanced packages. First £30,000 is tax-free; anything above is taxed as income, no NI.
Take-home pay
£7,000
50.0% effective tax rate Income Tax plus employee National Insurance as a percentage of your gross salary. Excludes pension, student loan, and HICBC.
- Monthly
- £7,000
- Weekly
- £700
- Daily
- £27
- Hourly
- £3.59
| Statutory redundancy pay | £7,000 |
|---|---|
| Enhanced / contractual | £0 |
| Total gross payment | £7,000 |
| Tax-free (up to £30,000) | £7,000 |
| Taxable portion | £0 |
| Income Tax on taxable portion | −£0 |
| Net received | £7,000 |
Cite or embed - free under CC BY 4.0
How statutory redundancy pay works
UK employees with 2+ years of continuous service are entitled to statutory redundancy pay if their role is made redundant. The formula:
Weighted weeks × capped weekly pay
where:
- Weighted weeks = service years × age factor:
- Under 22: 0.5 weeks per year
- 22–40: 1 week per year
- 41+: 1.5 weeks per year
- Capped weekly pay: £751 (2026/27), £719 (2025/26), £700 (2024/25), £643 (2023/24)
- Service years: capped at 20
Tax treatment
- First £30,000 of redundancy pay is tax-free and NI-free. Static since 1988.
- Above £30,000: taxed as income at your marginal rate, but no NI.
- PILON (Pay In Lieu Of Notice): since 2018 always taxed in full as earnings, doesn’t share the £30k shelter.
Worked example
Age 45, 10 years’ service, £1,000/week:
- Capped weekly pay = £751 (2026/27)
- Weeks = 10 × 1.5 = 15 weeks
- Statutory pay = 15 × £751 = £11,265
- If employer adds £22,000 enhanced = total £33,265
- Tax-free: £30,000. Taxable: £3,265 — if other income is £40k/yr, that’s at 20% basic rate = £653 Income Tax.
- Net: £32,612.
What we don’t cover
- Directors / officeholders — different treatment.
- Settlement agreements with ex-gratia components split from compensation.
- Foreign-service relief (for employees with significant overseas service).
- Death / disability payments — fully exempt regardless of £30k cap.
Related guides
- Statutory Pay Rates 2026/27 — the £751 weekly cap and other statutory uprates you’re assumed to know.
- UK Tax Year Changes 2026/27 — how the £30k exemption sits alongside the other 2026/27 thresholds.
- PAYE Explained — how the taxable portion above £30k is collected through your final payslip.
Frequently asked questions
- How is statutory redundancy pay calculated?
- By service years (capped at 20), weekly pay (capped at £751 for 2026/27; was £719 in 2025/26), and age-weighted weeks: 0.5 week/year under 22, 1 week/year 22-40, 1.5 weeks/year at 41+.
- How much redundancy is tax-free?
- The first £30,000 of any redundancy payment (statutory + enhanced combined) is tax-free and free of NI. Anything above is treated as income and taxed at your marginal Income Tax rate - but still no NI.
- What counts as "redundancy pay"?
- Statutory redundancy + enhanced / contractual severance + pay in lieu of notice (PILON) - HMRC looks at the "Redundancy" part and applies the £30k threshold. PILON and bonuses are usually taxed in full.
- Does the £30k include PILON?
- No - Pay In Lieu Of Notice is now always subject to Income Tax and NI as normal earnings, after a 2018 rule change. Don't expect it to share the £30k shelter.
- Does age affect the multiplier?
- Yes. For each year of service the employee was aged 41+, they get 1.5 weeks. Years at 22-40 count as 1 week. Years under 22 count as 0.5 week. HMRC computes this year-by-year - our calculator uses current age as an approximation.
Related calculators
Other UK tax calculators that pair with the Redundancy.