UK Redundancy Pay Calculator 2026/27

How statutory redundancy pay works in the UK

If you are made redundant in the UK and have been continuously employed for at least two years, you are entitled to statutory redundancy pay. The amount depends on three factors: your age, your length of service (up to a maximum of 20 years), and your weekly pay (capped at £751 per week for 2026/27).

Statutory redundancy pay is calculated using a multiplier that varies by age band. Younger workers receive half a week's pay per year of service, workers aged 22-40 receive one week's pay, and workers aged 41 and over receive one and a half weeks' pay. The calculation applies the correct multiplier to each year of service based on how old you were during that year.

2026/27 statutory redundancy pay rates

The weekly pay cap for England, Wales and Scotland in 2026/27 is £751. For Northern Ireland it is £783. If your actual weekly pay is above the cap, only the capped amount is used in the calculation. The maximum statutory redundancy payment is therefore £22,530 (30 years × 1.5 weeks × £751 - though in practice the service cap of 20 years limits this to £22,530).

The £30,000 tax-free threshold

The first £30,000 of a redundancy payment is tax-free, this covers statutory redundancy pay, any enhanced (ex-gratia) payment above the statutory amount, and certain other termination payments. Anything above £30,000 is subject to income tax at your marginal rate and must be declared on a Self Assessment return if HMRC does not collect it through PAYE.

Note that notice pay, holiday pay and any payment in lieu of notice (PILON) are always fully taxable, they do not count towards the £30,000 exemption regardless of how they are described in your settlement agreement.

Notice pay - statutory vs contractual

Your notice entitlement is the higher of your statutory minimum and your contractual notice period. The statutory minimum is one week per complete year of service, up to a maximum of 12 weeks, once you have been employed for two years. Your contract may give you more and that contractual notice is what your employer must pay.

If your employer asks you not to work your notice and pays you instead, this is a payment in lieu of notice (PILON). Since April 2018, all PILONs are taxable as employment income regardless of whether your contract contained a PILON clause. This changed the previous position where contractual PILONs could sometimes be paid tax-free.

Accrued holiday pay

At the point your employment ends, you are entitled to be paid for any accrued but untaken statutory holiday. Your employer must pay this at your normal rate of pay, not a reduced or averaged rate. Accrued holiday pay is fully taxable as employment income.

If you are on garden leave, you continue to accrue holiday entitlement during that period. If your employer refuses to pay for accrued holiday, you can raise a claim at an Employment Tribunal within three months of the failure to pay.

Enhanced redundancy pay

Some employers offer more than the statutory minimum, this is called enhanced or contractual redundancy pay. The enhanced amount is usually set out in your employment contract or in a collective agreement. Any enhanced payment above the statutory redundancy entitlement forms part of the £30,000 tax-free threshold pool. You do not get two separate £30,000 exemptions, it is one £30,000 across all qualifying termination payments.

Frequently asked questions about redundancy pay

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