Redundancy pay calculator

What you are owed, and what tax is actually due on it. 2026/27 rates, from 6 April 2026.

By James Burfield Rates from gov.uk, checked 5 August 2026 How this works

How statutory redundancy pay works

Three things decide it: your age, how long you worked there, and your weekly pay. You need at least 2 years of continuous service to qualify.

The band follows how old you were during each year of service, not your age when you leave. Someone who is 42 with three years behind them was 39, 40 and 41 during them, so they get one week, one week and one and a half.

The two caps

Weekly pay counts up to £751 however much you earn, and only your last 20 years count. That puts a ceiling of £22,530 on statutory redundancy pay. The service cap works in your favour, because it keeps your most recent years, which are the ones at the highest rate.

The tax, which is where it gets misleading

The first £30,000 of the redundancy element is tax-free. That covers your statutory pay plus anything extra your employer adds on top.

No National Insurance above the threshold

Income tax applies to the amount over £30,000. Employee National Insurance does not. Your employer pays Class 1A on the excess instead.

This is the most common error in redundancy calculators, and it runs in the expensive direction: deducting NI there shows you less than you will actually receive, at exactly the moment the number matters most.

Notice pay is different

Notice pay, holiday pay, unpaid wages and bonuses are ordinary earnings. They are taxed in full, they carry National Insurance, and they do not use up any of your £30,000.

Both halves of that catch people out. A package can look more tax-free than it is, because the notice pay is fully taxable. And the redundancy element stays fully protected even when the notice pay is large.

If you do not know how much notice you are owed yet, work that out first: Toolbay's notice period calculator gives you the statutory weeks for your length of service, which is the figure this page then taxes.

Questions

How is statutory redundancy pay worked out?

By your age and how long you worked there. Half a week's pay for each full year you were under 22, one week for each year you were 22 to 40, and one and a half weeks for each year you were 41 or older. The band depends on how old you were during each year, not your age when you leave. You need at least 2 years of service to qualify at all.

Is there a limit on redundancy pay?

Two. Your weekly pay counts up to £751 however much you actually earn, and only your last 20 years of service count. Together they cap statutory redundancy pay at £22,530, which is £751 times 1.5 times 20. These figures apply from 6 April 2026.

Do I pay tax on redundancy pay?

The first £30,000 of the redundancy element is tax-free, counting your statutory pay and any extra your employer adds together. Above that you pay income tax. Statutory redundancy pay on its own is almost always under the threshold and therefore tax-free.

Do I pay National Insurance on redundancy pay?

No. Not on the tax-free part, and not on the amount above £30,000 either. Your employer pays Class 1A National Insurance on the excess instead. This is worth knowing because several redundancy calculators deduct employee NI there and show you less than you will actually get.

What about my notice pay and holiday pay?

Those are ordinary earnings. They are taxed in full, they carry National Insurance, and they do not use up any of your £30,000. That catches people out in both directions: a package can look more tax-free than it is, while the redundancy element stays fully protected.

Why is my tax higher than I expected?

Because the taxable part sits on top of everything else you have earned in the tax year. If you have already used your Personal Allowance and part of the basic rate band, the excess can land in the 40% band even though your salary alone never reached it. Putting your pay so far this year into the calculator above is what makes the figure realistic.