Redundancy Pay Calculator
= £31,200/year
Extra amount above statutory (if offered by employer)
Total Package
£6,000
Tax-Free
£3,000
You Receive (Net)
£5,160
Payment Breakdown
Tax Treatment
Year-by-Year Breakdown (5 years)
| Year | Age | Multiplier | Amount |
|---|---|---|---|
| 1 | 35 | 1 week | £600 |
| 2 | 34 | 1 week | £600 |
| 3 | 33 | 1 week | £600 |
| 4 | 32 | 1 week | £600 |
| 5 | 31 | 1 week | £600 |
| Total | 5 weeks | £3,000 | |
1. Weekly Pay: Enter your average gross weekly pay (before tax). If you're salaried, divide your annual salary by 52.
2. Age & Service: Enter your age at the date of redundancy and your complete years of continuous service.
3. Enhanced Redundancy: If your employer offers more than the statutory minimum, enter the extra amount here.
4. Notice Pay: Toggle this on to include notice pay in your total package. Notice pay is always taxable.
Understanding UK Redundancy Pay
Statutory redundancy pay is a legal entitlement for employees who have worked for their employer for at least 2 continuous years. It is calculated based on your age, weekly pay, and length of service. This applies equally to full-time and part-time employees.
How is Weekly Pay Calculated?
Your weekly pay is the average of your gross earnings over the 12 weeks before your redundancy notice date. For salaried employees, this is simply your annual salary divided by 52. From April 2025, weekly pay is capped at £719 for statutory redundancy calculations — though your employer may use your actual pay for enhanced packages.
Tax Rules for Redundancy Pay
The first £30,000 of redundancy pay is completely tax-free — no income tax and no National Insurance. This threshold covers both statutory and enhanced redundancy pay combined. Any amount above £30,000 is taxed as income at your marginal rate.
Important: Notice Pay
Notice pay (whether worked or paid as PILON) is always taxable as normal earnings, regardless of the £30,000 threshold. It is subject to both income tax and NI.
Enhanced / Contractual Redundancy
Many employers offer enhanced redundancy packages above the statutory minimum. Common enhancements include:
- A higher multiplier (e.g., 2 weeks per year instead of 1)
- Using actual weekly pay instead of the £719 cap
- A flat ex-gratia lump sum on top of statutory
Enhanced payments still benefit from the £30,000 tax-free threshold, but the combined total of statutory + enhanced must stay within £30,000 to remain fully tax-free.
Statutory Redundancy Pay Examples
| Scenario | Statutory Pay | Tax-Free? |
|---|---|---|
| Age 30, 5 years, £500/wk | £2,500 | Yes (under £30k) |
| Age 45, 15 years, £719/wk | £14,380 | Yes (under £30k) |
| Age 55, 20 years, £719/wk | £21,570 | Yes (under £30k) |
| Age 35, 10 yrs + £25k enhanced | £7,190 + £25k | Partly (£2,190 taxable) |
Based on April 2025 weekly pay cap of £719.
Claiming Redundancy Pay
If your employer fails to pay you statutory redundancy, you have 6 months from your last day of employment to make a claim to an employment tribunal. If your employer is insolvent, you can claim from the Redundancy Payments Service.
2025/26 Key Rates
- Weekly Pay Cap
- £719
- Max Statutory Pay
- £21,570
- Tax-Free Threshold
- £30,000
- Max Years
- 20
- Min Service
- 2 years