Tax

Redundancy Pay Calculator UK 2026 — Statutory & Enhanced Pay Guide

Calculate your redundancy pay. Statutory minimums, enhanced packages, tax treatment, and what you're entitled to.

By PocketWise · · 4 min read

Tax information is based on HMRC rules for the 2026/27 tax year. Tax rules can change — always verify current rates at GOV.UK. This is not tax advice. Consider consulting a qualified tax adviser for your personal situation.

Understanding your redundancy entitlements helps you know what to expect and negotiate. Here’s how to calculate statutory and enhanced redundancy.

Statutory Redundancy Pay

Qualifying Criteria

Requirement Detail
Minimum service 2 years continuous
Employment status Employee (not self-employed)
Genuine redundancy Role no longer needed
Age No upper limit

Calculation Formula

Your Age Pay Per Year of Service
Under 22 0.5 week’s pay
22-40 1 week’s pay
41 and over 1.5 week’s pay

Weekly Pay Cap 2026/27

Maximum weekly pay used £700
Maximum years counted 20
Maximum statutory redundancy £21,000

Redundancy Calculator

Examples by Age and Service

Weekly Pay: £700 (capped)

Age Years Service Calculation Statutory Pay
25 5 years 3 yr × 0.5 + 2 yr × 1 = 3.5 weeks £2,450
30 8 years 8 yr × 1 = 8 weeks £5,600
35 10 years 10 yr × 1 = 10 weeks £7,000
40 15 years 15 yr × 1 = 15 weeks £10,500
45 15 years 5 yr × 1 + 10 yr × 1.5 = 20 weeks £14,000
50 20 years 20 yr × 1.5 = 30 weeks (capped at 20) £21,000
55 25 years Capped at 20 years = 30 weeks £21,000

Full Calculation Table

Service: 15 Years

Age at Redundancy Years at Each Rate Total Weeks Pay (at £700 cap)
30 7 yr × 0.5 + 8 yr × 1 = 11.5 11.5 £8,050
35 2 yr × 0.5 + 13 yr × 1 = 14 14 £9,800
40 15 yr × 1 = 15 15 £10,500
45 10 yr × 1 + 5 yr × 1.5 = 17.5 17.5 £12,250
50 5 yr × 1 + 10 yr × 1.5 = 20 20 £14,000
55 15 yr × 1.5 = 22.5 (capped) 20 £14,000

Working Backwards by Service Length

Years Service Age 25 Age 35 Age 45 Age 55
2 £700 £1,400 £2,100 £2,100
5 £2,100 £3,500 £4,900 £5,250
10 £4,900 £7,000 £10,500 £10,500
15 £8,050 £10,500 £14,000 £14,000
20 £11,550 £14,000 £17,500 £21,000

Enhanced Redundancy

Common Enhanced Packages

Employer Approach Multiplier Example (10 years, age 40)
Statutory minimum 1× £7,000
Double statutory 2× £14,000
Actual week’s pay Uncapped £10,000+
Weeks per year of service Varies £5,000-50,000
Months per year Generous £40,000+

Enhanced Package Examples

Actual Salary: £52,000/year (£1,000/week)

Package Type 10 Years Service Payment
Statutory (capped at £700) 10 weeks £7,000
Actual weekly pay × years 10 weeks actual £10,000
2 weeks per year (actual) 20 weeks £20,000
1 month per year 10 months £43,333

Negotiating Enhanced Redundancy

Leverage Point How to Use It
Long service Emphasise loyalty
Specialised skills Hard to replace
Multiple offers Negotiate between
Legal risks for employer Settlement agreements
Early volunteer bonus Often higher

Tax on Redundancy

Tax-Free Allowance

Component Tax Treatment
Statutory redundancy Tax-free (within £30,000)
Enhanced redundancy Tax-free (within £30,000)
PILON (notice pay) Taxable
Holiday pay Taxable
Bonus Taxable
Benefits in kind Taxable

The £30,000 Threshold

Total Redundancy Tax-Free Taxable Tax (40% rate)
£20,000 £20,000 £0 £0
£30,000 £30,000 £0 £0
£40,000 £30,000 £10,000 £4,000
£60,000 £30,000 £30,000 £12,000
£100,000 £30,000 £70,000 £28,000

Example: £50,000 Package Breakdown

Component Amount Tax Treatment
Enhanced redundancy £35,000 £30k tax-free, £5k taxable
Accrued holiday (10 days) £2,000 Taxable
Notice pay (worked) £13,000 Taxable (PAYE)
Total £50,000
Tax-free element £30,000
Taxable element £20,000 ~£8,000 tax (40%)
Net received ~£42,000

Notice Pay (PILON)

If You Work Notice If Paid In Lieu (PILON)
Normal PAYE applies PILON is taxable
Salary as usual No NI if genuine redundancy
Continues employment Contract ends immediately

Other Entitlements

What Else You Should Receive

Entitlement Detail
Accrued holiday Paid out, taxable
Notice period Work it or PILON
Pension contributions Until leaving date
Private healthcare Usually ends on leave date
Company car Return or purchase option
Bonus Pro-rata if in contract

Time Off for Job Hunting

If Service 2+ Years Entitled To
Reasonable time off To look for work
Paid At usual rate
No standard amount “Reasonable”

Timeline

Redundancy Process

Stage Minimum Timeframe
Consultation (under 20 people) No minimum
Consultation (20-99 people) 30 days
Consultation (100+ people) 45 days
Notice period As per contract
Payment Within normal pay cycle

When You’ll Be Paid

Payment Type When
Statutory redundancy With final pay
Enhanced redundancy Often with final pay
PILON With final pay
Holiday pay With final pay

Alternatives to Redundancy

Before Accepting

Consider Potential Benefit
Redeployment Keep employment
Reduced hours Partial income
Career break Job to return to
Early retirement If close to pension
Settlement agreement Negotiate higher

Settlement Agreements

What They Are Negotiated exit package
Often include Enhanced pay, references
You give up Right to tribunal claim
You must Get independent legal advice
Employer usually pays Your legal fees

After Redundancy

Immediate Steps

Action Timing
Sign on for JSA/UC Within 3 days if claiming
Update CV Immediately
Check pension options Review and consolidate
Financial review Adjust budget

Benefit Entitlements

If Claiming UC Effect of Redundancy Pay
Under £6,000 savings No effect
£6,000-16,000 Tariff income applied
Over £16,000 May not be eligible

Plan before leaving if savings will exceed threshold.

Key Takeaways

  1. Minimum 2 years service — to qualify for statutory
  2. Age matters — over-41s get 1.5 weeks per year
  3. £700 weekly cap — for statutory calculation
  4. £30,000 tax-free — significant benefit
  5. Negotiate — many employers pay more than statutory
  6. Get advice — for settlement agreements

For related content, see our tax code checker guide, emergency fund guide, and jobseeker benefits.

Sources

  1. GOV.UK — Redundancy: your rights