UK Redundancy Pay Calculator 2026/27

UK statutory redundancy pay for 2026/27 plus tax on enhanced packages. The first £30,000 is tax-free; the rest is taxed as income, no employee NI.

Employment & Career

Redundancy pay after tax

£7,000

10.0 weeks' pay (statutory)

Total before tax: £7,000
Weekly pay used (capped): £700

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

How UK statutory redundancy pay works in 2026/27

Employees with at least 2 years’ continuous service are entitled to statutory redundancy pay if they are dismissed by reason of redundancy (Employment Rights Act 1996 ss.135 and 155). There is no upper age limit: the old one in s.156 was repealed in 2006. The amount, under s.162, is:

Weighted weeks × weekly pay (capped)

where:

Weighted weeks, counting back from the end of your employment, for each full year of service:
- half a week’s pay for a year in which you were under 22
- one week’s pay for a year in which you were 22 or older but under 41
- one and a half weeks’ pay for a year in which you were 41 or older
Weekly pay is your average over the 12 weeks before the day you got your redundancy notice, capped at £751 if you were made redundant on or after 6 April 2026 (£719 before that). The cap is set each year by order, currently the Employment Rights (Increase of Limits) Order 2026.
Service is capped at 20 years (s.162(3)).
Maximum statutory redundancy pay: 20 × 1.5 × £751 = £22,530, the figure gov.uk gives.

You must claim within 6 months of the date your job ends: in writing to your employer, or by referring it to an employment tribunal (s.164).

How the calculator above counts. It counts year by year as the Act does: with your age in whole years at redundancy, the most recent year is taken to start at your age minus one, the year before at your age minus two, and so on, the same convention as the gov.uk redundancy pay calculator. Under 2 complete years of service it shows no statutory entitlement (s.155).

Tax treatment of redundancy payments

1. Statutory and non-contractual redundancy pay: the £30,000 threshold

Payments made in connection with the termination of employment fall under ITEPA 2003 Part 6 Chapter 3 (s.401). Only the amount above £30,000 counts as employment income (s.403). Statutory redundancy pay is exempt from tax as earnings (s.309) but still counts towards the £30,000, alongside any enhanced or ex-gratia redundancy pay and compensation for loss of office.

There is no employee NI on these payments. Since 6 April 2020 the employer pays Class 1A NI on the amount above £30,000 (Social Security Contributions and Benefits Act 1992 s.10(1A)).

2. Notice pay: always taxed in full

Since 6 April 2018, post-employment notice pay (PENP) - broadly the basic pay you would have earned in an unworked notice period - is treated as earnings (ITEPA ss.402A-402E), with Income Tax and Class 1 NI as normal. It cannot use the £30,000 threshold. Before 2018 contractual pay in lieu of notice was already taxed as earnings, but a non-contractual payment for unworked notice could sometimes fall within the threshold; the PENP rules closed that.

3. Employer pension contributions

An employer contribution to a registered pension scheme made as part of the termination arrangement is outside the termination-payment rules (s.408), so it does not use the £30,000 threshold and carries no Income Tax or NI when paid in. It counts towards your annual allowance (£60,000 standard, plus any carry-forward), and the money is taxed when you draw it, with normally a quarter available tax-free within the lump sum limits. It needs the employer’s agreement and suits people who will not need the cash soon.

Worked examples for 2026/27

These assume each year of service runs birthday to birthday, England rates, and no other termination payments.

Example 1: age 45, 10 years’ service, £1,000 a week

Weekly pay capped at £751
Years counted back: 4 years at 41 or over (× 1.5) and 6 years at 35-40 (× 1) = 12 weeks
Statutory pay: 12 × £751 = £9,012
Employer adds £22,000 enhanced pay: total £31,012
Tax-free: £30,000. Taxable: £1,012
With £40,000 of other income in the year, Income Tax on the excess: £202
Net: £30,810

The calculator above, and gov.uk’s, give the same 12 weeks.

Example 2: age 55, 25 years’ service, £900 a week

Weekly pay capped at £751
Only the last 20 years count: 14 years at 41 or over (× 1.5) and 6 years at 35-40 (× 1) = 27 weeks
Statutory pay: 27 × £751 = £20,277
Employer enhances the package to £50,000 in total
Tax-free: £30,000. Taxable: £20,000
With £60,000 of other income, Income Tax on the excess: £8,000
Net: £42,000

Example 3: age 51, 22 years’ service

Only the last 20 years count, covering ages 31 to 51:

Years counted back	Age during year	Weeks per year	Weeks
10 most recent	41-50	1.5	15
10 before that	31-40	1	10
Total			25 weeks

Statutory pay: 25 × £751 = £18,775.

Who is not entitled

gov.uk lists these exceptions: former registered dock workers and share fishermen; Crown servants, members of the armed forces or police services; apprentices who are not employees at the end of their training; and a domestic servant who is a member of the employer’s immediate family. You also lose the right if your employer offers to keep you on or offers suitable alternative work that you refuse without good reason. Dismissal for misconduct is not redundancy.

If your employer cannot pay

If your employer is insolvent, you can claim statutory redundancy pay from the National Insurance Fund through the Insolvency Service’s Redundancy Payments Service (ERA ss.166-167), using the online claim for redundancy and money owed. The same £30,000 tax threshold applies.

If your employer will not pay and is not insolvent, write to claim it and, if needed, refer it to an employment tribunal within the 6-month time limit.

Settlement agreements

A settlement agreement waives claims in return for a payment. For the waiver to be binding the employee must have received advice from a relevant independent adviser on its terms and effect (ERA s.203(3)). Tax treatment:

Redundancy and compensation for loss of office: within the £30,000 threshold, with the excess taxed as income; no employee NI, employer Class 1A on the excess
Notice pay (PENP): taxed in full with Class 1 NI
Payments for restrictive covenants: taxed in full as earnings (ITEPA s.225)
Legal costs paid by the employer directly to your adviser under the agreement: exempt when the conditions in ITEPA s.413A are met

Common errors

Treating notice pay as part of the £30,000 - PENP has been taxed in full since April 2018.
Counting the 20 years forward - the Act counts back from the end of employment, so the oldest years drop out.
Using the age at redundancy for every year - each year takes the age during that year.
Missing the 6-month claim deadline - s.164.
Accepting less than statutory - a contractual scheme can pay more than statutory, never less. Public-sector schemes often pay more; check yours.

Statutory Redundancy Pay 2026/27 guide
Statutory Pay Rates 2026/27
PAYE + RTI new employer guide - how a termination payment goes through the final payslip
Pension contribution calculator
Salary calculator - test post-redundancy income
UK State Pension guide
Self-employed calculator - going self-employed after redundancy
Marriage Allowance calculator - a lower-income year may make it worth claiming
Tax-Free Childcare deep-dive

Sources

Other UK tax calculators that pair with the Redundancy.

Cite or embed - free under CC BY 4.0

Frequently asked questions

How is statutory redundancy pay calculated?

Count back up to 20 full years of service from the end of your employment. Each year in which you were under 22 earns half a week's pay, 22 to 40 one week, and 41 or older one and a half weeks (Employment Rights Act 1996 s.162). Weekly pay is capped at £751 for redundancies on or after 6 April 2026. You need at least 2 years' service.

How much redundancy pay is tax-free?

The first £30,000 of redundancy and other termination payments taken together is tax-free (ITEPA 2003 s.403). Statutory redundancy pay counts towards that £30,000. Anything above it is taxed as income at your marginal rate. There is no employee NI on it, but the employer pays Class 1A NI on the amount over £30,000.

What counts towards the £30,000?

Statutory redundancy pay, enhanced or ex-gratia redundancy pay and compensation for loss of office are added together. Post-employment notice pay, holiday pay, bonuses and unpaid wages are earnings and are taxed in full through PAYE.

Does the £30k include pay in lieu of notice?

No. Since 6 April 2018 post-employment notice pay - broadly the basic pay for any notice you do not work - is taxed as earnings with Income Tax and Class 1 NI (ITEPA ss.402A-402E). It does not share the £30,000 threshold.

Does age affect the multiplier?

Yes, year by year: each year takes the age you were during it, not your age at redundancy. A year in which you were 41 or over all year counts 1.5 weeks, 22 or over 1 week, younger 0.5 (Employment Rights Act 1996 s.162). The calculator counts each year this way, as the gov.uk calculator does.

Is there a deadline to claim statutory redundancy pay?

Yes. You have 6 months from the date your job ends to claim, in writing to your employer or by referring it to an employment tribunal (Employment Rights Act 1996 s.164). If your employer is insolvent, claim through the Insolvency Service.