Income Tax UK: Tax Codes, Allowances, PAYE, Scottish Rates and ReliefsRedundancy Pay Calculator UK 2026 — Statutory & Enhanced Pay Guide
Calculate your redundancy pay. Statutory minimums, enhanced packages, tax treatment, and what you're entitled to.
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 |
| 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
| 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
- Minimum 2 years service — to qualify for statutory
- Age matters — over-41s get 1.5 weeks per year
- £700 weekly cap — for statutory calculation
- £30,000 tax-free — significant benefit
- Negotiate — many employers pay more than statutory
- Get advice — for settlement agreements
For related content, see our tax code checker guide, emergency fund guide, and jobseeker benefits.