Voluntary Redundancy Calculator UK
Calculate your full voluntary redundancy package — statutory pay, enhanced redundancy, notice pay, holiday pay, and your true net take-home after tax. Updated for April 2026 using the new £751/week statutory cap and £22,530 maximum confirmed by The Employment Rights (Increase of Limits) Order 2026.
Know Your Full Redundancy Entitlement
Whether you are considering accepting a voluntary redundancy offer, negotiating an enhanced redundancy package, or simply understanding your statutory redundancy entitlement, this calculator covers every element: the redundancy pay formula, the £30,000 tax-free threshold, notice pay (PILON), accrued holiday pay, ex gratia payments, and the pension contribution strategy that could save you thousands in tax.
April 2026 Statutory Redundancy Rates — Confirmed
(from 6 April 2026)
(20 yrs × £751 × 1.5)
(statutory + enhanced)
(most recent years)
Source: The Employment Rights (Increase of Limits) Order 2026, announced 16 March 2026, effective 6 April 2026. Confirmed by Acas and The Employment Law Solicitors (20 March 2026).
Voluntary Redundancy Calculator
Your Voluntary Redundancy Summary
Total Gross Package
Total Tax-Free
Total Tax & NI Deducted
Tax on Excess (above £30k)
Net Take-Home Pay
Effective Overall Tax Rate
Full Package Breakdown
- Statutory Redundancy Pay:£0
- Enhanced Redundancy Pay:£0
- Ex Gratia / Severance:£0
- Subtotal: Qualifying Redundancy Pay:£0
- Tax-Free (up to £30,000):£0
- Taxable Excess (above £30,000):£0
- Notice Pay / PILON (taxable):£0
- Accrued Holiday Pay (taxable):£0
- Pension Contribution:−£0
- Total Gross Package:£0
Tax & NI Calculation
- Tax-Free Redundancy Portion:£0
- Taxable Redundancy Excess:£0
- Taxable Notice / PILON:£0
- Taxable Holiday Pay:£0
- Total Taxable Amount:£0
- Income Tax on Taxable Elements:£0
- National Insurance (on PILON/Holiday):£0
- Net Take-Home:£0
Statutory Redundancy Pay Calculation
- Age at Redundancy:0
- Complete Years of Service:0
- Qualifying Years (max 20):0
- Actual Weekly Pay:£0
- Weekly Pay Used (capped £751):£0
Age Band Breakdown:
| Age Band | Years | Multiplier | Weeks' Pay | Amount (£) |
|---|
- Statutory Pay:£0
- Weekly Cap Used:£751
- Max Possible (20 yrs):£22,530
Tax Planning Opportunity: Pension Contribution
Your package includes £0 of taxable income above the £30,000 exemption. Contributing this to a pension (SIPP or workplace pension) could save you approximately £0 in income tax and NI. Your employer may also save 15% employer Class 1A NI on any taxable PILON/excess contributed as an employer pension contribution — they may be willing to share this saving with you.
Personal Allowance Taper Warning
Your total income this tax year including the taxable parts of your redundancy package exceeds £100,000. This means your Personal Allowance (£12,570) is being withdrawn — creating an effective 60% marginal tax rate on income between £100,000 and £125,140. Contributing the excess to a pension could restore your Personal Allowance and save significant additional tax. See our Pension Tax Relief Calculator for the exact saving.
About This Calculation
This calculator uses the April 2026 statutory weekly cap of £751 and £22,530 maximum (The Employment Rights (Increase of Limits) Order 2026). Tax uses 2026/27 income tax rates. PILON and holiday pay are treated as fully taxable earnings. Ex gratia payments and enhanced redundancy pay are treated as qualifying termination payments eligible for the £30,000 exemption. The PENP calculation is simplified — for complex cases (mixed PILON clauses, salary sacrifice, cash allowances), consult Acas (0300 123 1100) or an employment solicitor. This tool does not constitute legal or tax advice.
How UK Statutory Redundancy Pay Is Calculated
The statutory redundancy pay formula has three variables: your age, your length of continuous service, and your weekly pay (capped at £751 from April 2026). The formula applies age-based multipliers to completed years of service.
Under 22½ Week's Pay
For each full year of continuous service completed while you were under the age of 22, you receive half a week's pay.
Example: Worked age 18–21 = 3 years × 0.5 = 1.5 weeks' pay.
Many people have little or no service under 22. These years still count toward the total — use the calculator above to get your precise age-banded breakdown.
Age 22–401 Week's Pay
For each full year of service completed while aged 22 to 40, you receive one full week's pay.
Example: Worked age 22–30 = 8 years × 1.0 = 8 weeks' pay.
This is the most common band for the majority of employees. The weekly pay is capped at £751 even if your actual weekly earnings are higher. Your employer may offer enhanced pay on top of the statutory amount.
Age 41+1½ Weeks' Pay
For each full year of service completed while aged 41 or over, you receive one and a half weeks' pay — the most generous rate.
Example: Worked age 41–50 = 9 years × 1.5 = 13.5 weeks' pay.
This higher rate reflects the greater difficulty older workers may face in finding re-employment. The maximum statutory total from 6 April 2026 is £22,530 (20 years × £751 × 1.5).
Key Rules to Know
- Maximum qualifying service: Only the most recent 20 complete years count — older years are disregarded.
- Weekly pay cap: £751 from 6 April 2026, regardless of your actual earnings. Your employer may offer more than statutory through an enhanced scheme.
- Continuous employment: Your service must be continuous (unbroken). Certain gaps do not break continuity (e.g. maternity leave, illness, authorised absence) — check the Acas guide.
- Minimum qualifying period: You need at least 2 complete years of service to claim statutory redundancy pay.
- Age calculation: Each year is assessed at the age you were during that year of service — not your age at the date of redundancy.
Worked Example
An employee made redundant at age 45 with 12 years' service and a weekly pay of £900 (capped at £751):
| Age Band During Service | Years | Rate | Weeks' Pay | Amount |
|---|---|---|---|---|
| Age 41–45 (last 4 yrs of 12) | 4 | × 1.5 | 6.0 | £4,506 |
| Age 33–41 (8 yrs) | 8 | × 1.0 | 8.0 | £6,008 |
| Total | 14.0 | £10,514 | ||
All £10,514 falls within the £30,000 tax-free threshold — no income tax or NI payable on the statutory element. The actual weekly pay of £900 exceeds the £751 cap; any package above £751/week would be an enhanced redundancy element.
Tax Treatment of Voluntary Redundancy Packages
A voluntary redundancy package often contains several different payment types — and each is taxed differently. Getting this wrong is one of the most common and costly mistakes in redundancy planning.
Tax-Free (up to £30,000 combined)
- Statutory redundancy pay — always tax-free, never subject to employee NI.
- Enhanced/contractual redundancy pay — tax-free as part of the £30,000 combined limit.
- Ex gratia / discretionary payments — tax-free as part of the £30,000 combined limit if genuine compensation for termination (not a reward for past service).
Fully Taxable (as normal earnings)
- Payment in lieu of notice (PILON) — fully taxable and subject to NI since April 2018 under the PENP rules. No part benefits from the £30,000 exemption.
- Accrued holiday pay — treated as earnings, fully taxable and subject to NI.
- Salary for working notice / garden leave — normal pay, normal tax and NI.
- Bonuses, commission, overtime paid at or around termination — fully taxable as earnings.
- Restrictive covenant payments — fully taxable and subject to NI.
The £30,000 Exemption — What Many People Get Wrong
The £30,000 exemption applies to your total qualifying termination payments combined across all employments — not per job. If you received £25,000 tax-free redundancy from a previous employer in the same tax year, only £5,000 of your new package benefits from the exemption.
The label on a payment does not determine its tax treatment. HMRC looks at the substance: is it genuinely compensation for loss of employment, or is it a reward for past service? Payments that look like salary or contractual entitlements will be challenged — especially if the employer re-hires for the same role immediately after.
| Payment Type | Income Tax | Employee NI | Employer NI |
|---|---|---|---|
| Statutory redundancy pay | Tax-free | None | None |
| Enhanced pay (within £30k) | Tax-free | None | None |
| Enhanced pay (above £30k) | Taxable | None | 15% (Class 1A) |
| PILON / notice pay | Full rate | Full rate | Full rate |
| Holiday pay | Full rate | Full rate | Full rate |
| Working notice / garden leave | Full rate | Full rate | Full rate |
Using Your Redundancy Pay to Boost Your Pension
Why Pension Contributions at Redundancy Are So Powerful
If your redundancy package pushes your total income above the basic rate threshold (£50,270) or — critically — above £100,000, contributing the taxable excess to a pension can save you 40%, 45%, or even effectively 60% tax on that amount.
Example: You receive £50,000 enhanced redundancy (above the £30,000 exemption: £20,000 taxable at 40%). Contributing the £20,000 to a SIPP saves £8,000 in income tax. Your employer saves 15% Class 1A NI on any portion they contribute — they might share this saving (£3,000) with you as a top-up.
Redundancy is also an excellent time to use pension carry forward — if you have unused annual allowance from the previous three tax years, you can make a very large one-off pension contribution to shelter even more of your package. Use our SIPP Calculator to model the long-term growth and our Tax Relief Calculator for the immediate saving.
The £100,000 Personal Allowance Trap at Redundancy
If your total income for the tax year — including the taxable PILON, holiday pay, and any redundancy excess above £30,000 — rises above £100,000, your Personal Allowance begins to be withdrawn. For every £2 above £100,000, you lose £1 of Personal Allowance, creating an effective 60% marginal tax rate on income between £100,000 and £125,140.
Pension contributions reduce your adjusted net income for this purpose. Careful planning — often contributing just enough to bring income back to £100,000 — can restore the full £12,570 Personal Allowance and save £5,028 in additional tax. This is one of the most valuable tax planning moves available. See our Pension Tax Calculator for the exact numbers.
Pension Access After Voluntary Redundancy
If you are aged 55 or over when made redundant, you may be able to access your defined contribution pension immediately — through flexible drawdown, taking a lump sum, or purchasing an annuity. However, accessing pension income too early can significantly impact long-term retirement income.
Many people in their 50s who take voluntary redundancy use a combination of their redundancy pay as a bridge to State Pension age, then draw down their pension from 57+ (the new minimum from April 2028). Use our Retirement Age Calculator to plan the timing and our Drawdown Calculator to model income sustainability.
What Happens to Your Workplace Pension at Redundancy
When your employment ends through voluntary redundancy, employer contributions to your defined contribution (DC) pension stop. Your pot remains invested and you become responsible for any ongoing charges. You do not have to do anything immediately — you become a "deferred member" and the pot continues to grow (or fall) with investment returns.
For defined benefit (DB) / final salary pension members, you become a deferred pensioner. Your benefits are preserved, typically increasing with inflation (either CPI or a contractual rate) until you reach the scheme's normal pension age. You cannot generally access a DB pension early without actuarial reduction — and in many cases, keeping deferred DB benefits intact is far more valuable than transferring. See our CETV Calculator for transfer value modelling, and always take regulated advice before transferring a DB pension.
Your Rights During Voluntary Redundancy
Consultation Rights
For 20–99 redundancies, employers must consult collectively for at least 30 days. For 100+ redundancies, the minimum consultation period is 45 days. Individual consultation is required regardless of numbers. Failure to consult entitles you to up to 90 days' pay as a "protective award" per employee — claimable at Employment Tribunal.
Notice Entitlement
Statutory notice is 1 week per year of service up to 12 weeks maximum (after 12+ years). Your contract may provide longer notice. You are entitled to whichever is greater. Notice can be worked, taken as garden leave, or paid as PILON — all options are fully taxable under PENP rules since April 2018.
Time Off to Find Work
If you have at least 2 years' service, you are entitled to reasonable paid time off (up to 40% of normal working hours) to look for new work or arrange training during your notice period. This right is regardless of whether redundancy is voluntary or compulsory.
Settlement Agreement
Many voluntary redundancy offers come with a settlement agreement (formerly a compromise agreement) — a legally binding contract waiving your employment rights in exchange for an agreed package. You must take independent legal advice before signing. Employers typically pay a contribution towards your legal costs (often £250–£500). Never sign under time pressure without advice.
Can You Refuse Voluntary Redundancy?
Yes. You cannot be forced to accept voluntary redundancy. If you decline and are subsequently selected for compulsory redundancy through a fair process, your statutory rights remain intact. If you decline a suitable alternative role offered by your employer, you may lose your statutory redundancy pay entitlement — but the role must genuinely be suitable (same or similar pay, location, and terms).
Claim Deadline
You have 6 months minus 1 day from the date your employment ends to bring a statutory redundancy pay claim at Employment Tribunal. For contractual redundancy pay claims, it is 3 months minus 1 day. Free pre-claim conciliation through Acas (0300 123 1100) is available and mandatory before most Employment Tribunal claims.
Voluntary Redundancy FAQs
Voluntary redundancy uses the same statutory formula as compulsory redundancy: ½ week's pay per year under age 22; 1 week's pay per year aged 22–40; 1½ weeks' pay per year aged 41+. Weekly pay is capped at £751 from April 2026. Only the most recent 20 years count. Maximum statutory pay from April 2026 is £22,530.
Your employer may offer enhanced redundancy above this — either as a contractual entitlement or a discretionary enhanced package to attract volunteers. All statutory and enhanced pay within the combined £30,000 threshold is completely tax-free. Use this calculator for your exact figure, or check the GOV.UK redundancy pay calculator for a cross-reference.
The first £30,000 of qualifying redundancy pay — including both the statutory minimum and any enhanced/ex gratia element — is completely exempt from income tax and employee National Insurance. There is no NI on qualifying redundancy pay at any level (employee NI never applies to redundancy pay). Employer Class 1A NI at 15% applies to any amount above £30,000.
However, the tax-free treatment applies only to genuine compensation for loss of employment. Notice pay (PILON), accrued holiday pay, and contractual bonuses paid at termination are fully taxable and subject to NI — they do not form part of the £30,000 exemption. Source: GOV.UK termination payment tax guidance.
From 6 April 2026, the statutory weekly pay cap for redundancy calculations is £751 per week — up from £719 in 2025/26. This was confirmed by The Employment Rights (Increase of Limits) Order 2026, announced 16 March 2026 by The Employment Law Solicitors and confirmed by CIPP (17 March 2026). The maximum statutory redundancy payment is therefore £22,530 (20 years × £751 × 1.5).
Even if your actual weekly pay is £1,500, the statutory calculation uses only £751. Your employer may offer enhanced redundancy to make up the difference — and enhanced pay above the statutory minimum also benefits from the £30,000 combined tax-free exemption.
PILON — Payment In Lieu of Notice — is the payment you receive when your employer ends your contract without requiring you to work your notice period. Since April 2018, all PILON payments are fully subject to income tax and National Insurance under the Post-Employment Notice Pay (PENP) rules — regardless of whether your contract contained a PILON clause. This changed the pre-2018 position where non-contractual PILON could sometimes be tax-free.
PILON is separate from and cannot reduce the benefit of the £30,000 tax-free redundancy exemption. If you receive both redundancy pay and PILON, the redundancy pay benefits from the £30,000 limit and PILON is taxed in full as earnings. Garden leave is also taxed as normal salary. Source: MoneyHelper redundancy tax guide.
If your redundancy package includes taxable elements (PILON, holiday pay, or redundancy excess above £30,000) that push your total income above the basic rate threshold or — crucially — above £100,000, contributing to a pension is an extremely tax-efficient strategy. Contributing taxable excess at 40% saves £400 for every £1,000 contributed. For income in the £100,000–£125,140 range where the Personal Allowance is being withdrawn, the effective saving is 60p per £1 contributed.
There is no special NI relief on personal pension contributions from redundancy pay — but employer pension contributions as part of a package are exempt from employer NI (saving 15%), which your employer may pass on to you. The redundancy contribution counts toward your annual allowance (£60,000 for 2026/27), so check your allowance position first using our Pension Tax Calculator. For independent advice, contact MoneyHelper (0800 011 3797 — free).
Your employer has three options: require you to work your notice period (you receive normal pay); place you on garden leave (you remain employed on full pay but don't attend work); or pay you PILON (a lump sum in lieu of the notice period). All three result in the same tax treatment — fully taxable as earnings through PAYE.
Your contract may specify which option applies. Even if your contract is silent on PILON, your employer can still pay PILON — since April 2018 it is taxable regardless. Statutory notice entitlement is 1 week per year of service, up to 12 weeks. Your contract may specify longer notice. You are entitled to whichever is greater — statutory or contractual. If your employer pays less than your contractual notice entitlement, you can pursue a breach of contract claim.
Taking voluntary redundancy does not directly reduce your State Pension — your entitlement is based on your National Insurance record to date. However, if you stop working and earning and stop paying NI contributions, you may accrue fewer qualifying years. You need 35 qualifying years for the full new State Pension (approximately £11,973/year for 2025/26).
If you are made redundant and are looking for work, you can receive NI credits while claiming Jobseeker's Allowance — these count as qualifying years. If you are caring for children or a disabled person, you may also receive NI credits. Check your NI record at GOV.UK and use our State Pension Calculator to estimate the impact of any gaps.
Acas (0300 123 1100 — free helpline, Monday–Friday 8am–6pm) provides free, confidential advice on redundancy rights, notice pay, consultation, and Employment Tribunal processes. Citizens Advice (0800 144 8848 in England) offers free independent advice on employment rights. MoneyHelper (0800 011 3797) provides free financial guidance on redundancy pay, tax, and benefits.
For legal advice on settlement agreements or Employment Tribunal claims, you will typically need an employment solicitor. Many offer free initial consultations. Your trade union (if you are a member) can provide free representation. For redundancy financial planning — particularly pension contributions, tax optimisation, and investment of your package — a FCA-regulated financial adviser can provide personalised regulated advice.
Plan What To Do With Your Redundancy Pay
SIPP Calculator
Model how your redundancy pay could grow as a pension contribution over time.
SIPP CalculatorPension Tax Relief
Calculate exactly how much tax you save by contributing redundancy pay to a pension.
Tax Relief CalculatorPension Tax Calculator
Full pension tax tool — annual allowance, taper, £100k trap, and withdrawal tax.
Pension TaxSavings Calculator
Plan how your redundancy pay could grow in a savings account or ISA.
Savings CalculatorDrawdown Calculator
If you're 55+, model how long your pension pot will last in early retirement.
DrawdownRetirement Age Calculator
Find your State Pension age and plan whether redundancy can bring forward retirement.
Retirement AgeState Pension Calculator
Check how gaps caused by redundancy affect your State Pension entitlement.
State PensionPrivate Pension Calculator
Project your pension pot growth if you invest your redundancy pay and keep contributing.
Private PensionMake Your Redundancy Pay Work as Hard as Possible
From tax-free statutory pay to pension strategy and savings planning — use our free calculators to ensure your redundancy package goes further.
Disclaimer & Legal Sources
This voluntary redundancy calculator uses the April 2026 statutory weekly pay cap of £751 and maximum of £22,530 as confirmed by The Employment Rights (Increase of Limits) Order 2026 (announced 16 March 2026). Income tax uses 2026/27 HMRC rates. PILON and holiday pay are modelled as fully taxable earnings per rules in force since April 2018 (Finance Act 2017). Tax treatment of termination payments follows GOV.UK termination payment guidance. The PENP calculation is simplified and does not account for all variables (salary sacrifice, cash allowances, complex PILON structures). This tool does not constitute legal, tax, or financial advice. For employment rights advice: Acas (0300 123 1100). For tax guidance: MoneyHelper (0800 011 3797). For regulated financial advice: FCA register. Sources: Acas Redundancy Pay · GOV.UK Redundancy Rights · Employment Law Solicitors (March 2026) · abrdn Techzone — Redundancy Tax Planning · LITRG Redundancy Guide.