UK Redundancy Pay Calculator 2026 — Free, Recruiter-Built

How UK statutory redundancy pay actually works

Three numbers determine your statutory amount: weeks per year (varies by age band), your weekly pay (capped at £719 for 2025/26), and your length of service (capped at 20 years). The age-band rule is straightforward: half a week's pay for each complete year of service when you were under 22, one week's pay for each complete year between 22 and 40, and one and a half week's pay for each complete year aged 41 or over. The calculator does the band split for you based on your service history.

The 20-year service cap matters more than candidates expect. A 30-year tenure does not produce 30 years of statutory redundancy pay — only the most recent 20 count, and they count at the age-band rate during those 20 years. Long-tenured employees often see lower-than-expected statutory figures because of this cap, and senior or unionised candidates' enhanced schemes typically remove it deliberately as a recruitment and retention argument.

The £30,000 tax-free portion

UK redundancy pay is tax-free up to £30,000. This applies to the statutory amount and the ex-gratia portion of any settlement agreement. Anything above £30,000 is taxed at your marginal income tax rate plus National Insurance. Most statutory amounts come in well below £30,000 because the weekly pay cap and 20-year cap limit the total. Enhanced schemes and settlement agreements at senior levels can cross the £30k threshold — at that point, the tax planning around how the payment is structured becomes meaningful, and a chartered accountant or solicitor specialising in employment exits can recover their fee on the structuring alone.

The £30k tax-free band has not been uprated since 1988. In real terms, it has lost roughly two-thirds of its purchasing power since then. If you are receiving a senior-level redundancy package in 2026, expect the taxable portion to be larger than the equivalent package would have been a decade ago — not because the amount is bigger, but because the tax-free shelter has shrunk against inflation.

PILON, garden leave, and the things that aren't redundancy pay

Pay in lieu of notice (PILON) is fully taxable. It looks similar to redundancy pay because it lands at the same time, but it is treated as ordinary employment income for tax purposes, even when written into a settlement agreement. Garden leave means you stay employed during your notice period without working — also fully taxable as ordinary income. Holiday-pay buyout for unused leave is fully taxable. Bonuses prorated to the exit date are fully taxable. The only portion that benefits from the £30k tax-free band is the redundancy pay itself plus any genuinely ex-gratia element of a settlement agreement.

For more on the resignation and exit process, see the UK notice period guide and the free notice period calculator. For the broader hiring market context — including the layoff cycle that has driven UK redundancy volume since 2024 — see the UK hiring patterns piece.

Settlement agreements: the negotiation candidates miss

Many UK redundancies are formalised as settlement agreements (formerly "compromise agreements"). The structure: enhanced redundancy pay in exchange for waiving the right to bring future legal claims. UK law requires you to take independent legal advice before signing — the employer typically pays £500-£1,500 toward the legal fee. What candidates miss: the first offer is rarely the final offer. Specialist employment solicitors recover their fee on the negotiation alone, usually finding 10-25% headroom on the ex-gratia portion. Ask explicitly whether the offer is final, or whether negotiation is on the table. Most are not final.

Why I built this

UK tech and financial services experienced a long layoff cycle through 2024 into 2025, and the volume of redundancies coming across my desk in 2026 — both for placements and for friends asking informally — made it clear that the calculator most people land on first is either out of date, hidden behind a sign-up wall, or framed by the employer rather than the candidate. This one is recruiter-built, free, runs in your browser, and assumes the candidate's perspective: what is genuinely owed and what is room to negotiate.

Common questions

Who qualifies for UK statutory redundancy pay?

Two basic conditions. You must have at least two years' continuous service with the employer, and the dismissal must be a genuine redundancy under UK employment law — meaning the role no longer exists, the workplace is closing, or there are too few jobs to go round. Casual or zero-hour workers with continuous service of two years also qualify. Self-employed contractors, agency workers technically employed by the agency, and most gig-economy workers do not. The full eligibility rules sit at gov.uk/redundancy-your-rights.

What is the weekly pay cap for redundancy in 2026?

The statutory weekly pay cap for redundancies in 2026 is £719 (uprated from £700 in April 2025). Any earnings above this figure are ignored for the statutory calculation, even if your actual weekly pay is much higher. The cap is uprated each April in line with the previous September's CPI inflation rate, so the figure changes annually. The calculator above uses £719 by default — if you are calculating a redundancy after April 2026, check gov.uk for the current figure and adjust the weekly pay input downward if your actual pay exceeds the new cap.

Is redundancy pay taxed in the UK?

The first £30,000 of statutory redundancy pay is tax-free. Anything above £30,000 is taxed at your marginal income tax rate (20%, 40% or 45%) and subject to National Insurance. Most statutory redundancy calculations come in well under £30,000 because of the weekly pay cap and the 20-year service cap, so most candidates pay no tax on their statutory amount. Enhanced redundancy packages above statutory often exceed the £30k threshold — at that point tax planning matters. PILON (pay in lieu of notice) is always fully taxable; it is not part of redundancy pay for tax purposes despite being paid at the same time.

What is the difference between statutory and enhanced redundancy pay?

Statutory is the legal minimum employers must pay. Enhanced is anything extra written into the contract or offered as part of a settlement. Many UK employers offer enhanced terms — typically two or three weeks per year of service rather than one, removing the weekly pay cap, or removing the 20-year service cap. Senior roles and union-represented industries often have generous enhanced terms baked into contracts. If your employer's redundancy policy is enhanced, the calculator's statutory figure is your floor, not your ceiling. Read your contract or settlement agreement carefully.

Should I sign a settlement agreement?

Sometimes yes, often with negotiation. Settlement agreements typically offer enhanced redundancy in exchange for waiving rights to bring future claims (unfair dismissal, discrimination, etc.). UK law requires you to take independent legal advice before signing, and the employer usually covers the legal fee (£500-£1,500 typical contribution). The legal advisor will check the agreement is fair, but the negotiation itself is your call. The single most overlooked move: many settlement agreements are first offers — there is often 10-25% headroom to negotiate, particularly on the ex-gratia (tax-free) portion. Specialist employment solicitors recover their fee on the negotiation alone.

UK Redundancy Pay Calculator