Electra HR

Free UK employment calculator

Redundancy package and tax calculator

Enter the redundancy pay, notice pay, holiday pay and any extra payments, and see what is tax-free, what is taxed as earnings, and what is over the £30,000 threshold. Post-employment notice pay is worked out for you.

Figures checked 15 October 2026 · England, Wales and Scotland

Calculator

Use our redundancy pay calculator if you don't have the figure.

Paid under a redundancy scheme solely because of redundancy.

For example an ex gratia or settlement payment for losing the job.

Or any other notice pay for notice not worked.

Notice and basic pay

Leave blank if no notice was given.

The longer of the contract and the statutory minimum.

Before tax, leaving out overtime, bonus, commission and allowances.

How it is worked out

A leaving package is taxed in three different ways.

  • Taxed as earnings: final salary, notice pay including pay in lieu of notice, holiday pay, bonuses, and any post-employment notice pay. Income tax and National Insurance apply as normal.
  • Tax-free up to £30,000: statutory redundancy pay, redundancy pay paid under a scheme solely because of redundancy, and other non-contractual compensation for losing the job (Income Tax (Earnings and Pensions) Act 2003, ss309, 401 and 403; HMRC Statement of Practice 1/94).
  • Over £30,000: the excess is subject to income tax but not employee National Insurance. The employer pays Class 1A National Insurance on it at 15%.

Post-employment notice pay stops employers dressing up notice pay as a tax-free payment. Where the employee does not work their full minimum notice, the basic pay for the unworked part is taken out of the non-contractual payments and taxed as earnings, less any notice pay already taxed (ITEPA 2003, s402D). Minimum notice is the notice the employer must give under the contract or the law, whichever is longer, counted from the day notice was given (s402E). Statutory redundancy pay is never converted, and the amount converted cannot be more than the non-contractual payments themselves.

Need the statutory figure first? Use our redundancy pay calculator, and our notice period calculator for the statutory minimum notice.

Worked example

Sam is made redundant on 30 November 2026 with no notice worked. His contract gives three months' notice and he earns £3,000 a month. He gets £10,000 statutory redundancy pay and £25,000 enhanced redundancy pay, but there is no pay in lieu clause and no notice pay. Three months' basic pay, £9,000, is post-employment notice pay and taxed as earnings. The remaining £16,000 plus the £10,000 statutory payment is £26,000, all within the £30,000 and tax-free.

Questions employers ask

+Is redundancy pay taxable?

Statutory redundancy pay is not taxed, and nor are other genuine redundancy and non-contractual compensation payments, up to a combined £30,000 (Income Tax (Earnings and Pensions) Act 2003, ss309, 401 and 403). Anything above £30,000 is subject to income tax. Notice pay, holiday pay, wages and bonuses are always taxed as normal.

+Is enhanced redundancy pay tax-free?

It can be. HMRC treats lump sums paid under a redundancy scheme solely because of redundancy as termination payments within the £30,000, whether the scheme is standing or set up for the occasion (Statement of Practice 1/94). Payments that are really a reward for work, such as a bonus for staying until a closure date, are taxed as earnings.

+Is pay in lieu of notice taxable?

Yes. Since 6 April 2018 all payments in lieu of notice are taxed and subject to National Insurance as earnings, whether or not the contract has a PILON clause. Where no notice pay is paid, part of any non-contractual payment is treated as post-employment notice pay and taxed instead.

+What is post-employment notice pay?

The basic pay the employee would have earned during any part of their minimum notice they did not work, less any notice pay already taxed. It is carved out of the non-contractual termination payments and taxed as earnings (ITEPA 2003, s402D). The formula is basic pay for the last pay period, times the days of unworked notice, divided by the days in that pay period. Where pay is monthly and the contract's notice is in whole months, months are used instead of days.

+Do employees pay National Insurance on redundancy pay?

Not on statutory redundancy pay or other termination payments within the £30,000 rules, including the part above £30,000. The employer pays Class 1A National Insurance on the amount over £30,000, at 15% for 2026 to 2027, through payroll.

+Does statutory redundancy pay count towards the £30,000?

Yes. It is tax-free in itself, but it uses up part of the £30,000 threshold, so it reduces how much of any other termination payment can be paid tax-free.

+How much tax will the employee actually pay?

That depends on their tax code and other income in the tax year, so this calculator shows which parts are taxable rather than the tax itself. Check the figures with your payroll provider or accountant before you pay.

Sources

This calculator gives a general estimate based on the law and statutory figures in force on 15 October 2026 for England, Wales and Scotland. It is not legal advice and does not take account of your contract, your policies or any special circumstances. Contractual terms can give more than the statutory minimum, never less. Northern Ireland has its own rules and limits and is not covered. Nothing you enter is stored or sent anywhere: the sums are done in your browser.