Get your personal redundancy figure in under 60 seconds
Use the Redundancy Pay Calculator →Statutory redundancy pay is the legal minimum your employer must pay if you are made redundant. The amount is not a flat figure — it is built from three variables: your age, your length of continuous service, and your weekly pay. All three interact through a single formula set by the government.
To qualify at all, you need to have worked continuously for the same employer for at least 2 years. If you are self-employed, a company director without an employment contract, or a member of the armed forces, statutory redundancy does not apply.
Your weekly pay used in the calculation is capped. For redundancies on or after 6 April 2026, that cap is £751 per week. If you earn more than £751 per week, only £751 counts. This cap is reviewed each April by the government. (For redundancies that occurred before 6 April 2026, the cap was lower — check the GOV.UK redundancy pay page for historical rates.)
Length of service is capped at 20 years. Years worked before the most recent 20 do not count.
The multiplier applied to each year depends on how old you were during that year of service. Older service years get a higher multiplier — the logic being that older workers face greater difficulty re-entering the labour market.
Figures source: GOV.UK — Redundancy: your rights — Redundancy pay (verified May 2026).
| Your age during that year of service | Multiplier per year | Example: year counts as… |
|---|---|---|
| Under 22 | 0.5 week's pay | Half a week's pay for each year under 22 |
| 22 to 40 (inclusive) | 1 week's pay | One week's pay per year in this bracket |
| 41 or over | 1.5 weeks' pay | One and a half weeks' pay per year aged 41+ |
One important nuance: the multiplier is based on the age you were during each specific year of service, not your age today. So if you are 43 and have worked for 5 years, two of those years were worked aged 41–42 (multiplier 1.5) and three were worked aged 38–40 (multiplier 1.0). The government's official calculator handles this automatically.
You are 35, earning £500 per week, and have worked for your employer for 8 years. All 8 years fall within the 22–40 bracket (multiplier: 1 week per year).
| Years of service | Age bracket | Multiplier | Weekly pay (capped) | Subtotal |
|---|---|---|---|---|
| 8 years | 22–40 | × 1.0 | £500 | £4,000 |
| Total statutory redundancy pay | £4,000 | |||
This is well under the £30,000 tax-free threshold, so you would owe no income tax on the redundancy payment itself.
You are 45, earning £900 per week (capped to £751), and have worked for your employer for 12 years (starting aged 33).
| Years in band | Age bracket | Multiplier | Weekly pay (capped) | Subtotal |
|---|---|---|---|---|
| 8 years | 22–40 | × 1.0 | £751 | £6,008 |
| 4 years | 41+ | × 1.5 | £751 | £4,506 |
| Total statutory redundancy pay | £10,514 | |||
You are 61, earning £1,200 per week, and have worked for the same employer for 20+ years. Service is capped at 20 years; pay is capped at £751. Assuming all 20 counted years fall aged 41 or over:
Rather than calculating by hand, use the redundancy pay calculator to get your precise figure based on your actual age, start date, and salary.
Statutory redundancy pay is tax-free up to £30,000 — this has been the HMRC threshold for many years and applies to the 2025–2026 tax year. If your total redundancy payment (statutory plus any enhanced amount) exceeds £30,000, the excess is subject to income tax at your marginal rate. National Insurance is not charged on redundancy pay, whatever the amount.
If you think you have paid too much tax in the year of redundancy — for example because you stopped working part-way through the tax year — you may be able to claim a refund. Use the tax refund calculator to estimate whether you are owed anything back, and the income tax calculator to check your overall liability for the year.
Many employers — particularly larger organisations and those with unionised workforces — offer enhanced (contractual) redundancy pay above the statutory floor. Common schemes multiply the statutory amount (e.g. “double statutory”) or use a more generous weekly pay figure without applying the legal cap.
Check your employment contract, staff handbook, or any collective agreement. Enhanced terms may be discretionary (not legally guaranteed) or contractual (you can enforce them). Where the combined statutory + enhanced payment remains below £30,000, the entire amount is still tax-free.
If your employer terminates your employment immediately rather than letting you work your notice period, they must pay PILON — a sum equivalent to the wages you would have earned during the notice period. PILON is fully taxable as earnings: income tax and National Insurance both apply, regardless of whether your contract explicitly includes a PILON clause.
PILON is entirely separate from redundancy pay. It does not count toward your £30,000 tax-free allowance — it sits in the taxable earnings bucket. Use the notice period calculator to check the minimum notice you are legally entitled to before estimating your PILON amount.
When your employment ends, your employer must pay out any accrued but untaken statutory holiday. This is calculated at your normal daily rate and is taxable as employment income — again, separate from redundancy pay. To check how much holiday you have accrued, the holiday entitlement calculator can help.
Some employees confuse notice pay and redundancy pay — they are distinct. Notice pay (whether worked or paid as PILON) compensates you for your contractual or statutory notice period; it is always taxed as salary. Redundancy pay compensates you for the loss of the job itself; the first £30,000 is tax-free. You can be entitled to both at the same time.
Employers sometimes offer a broader “severance” settlement — a negotiated lump sum that may include statutory redundancy pay, enhanced redundancy, garden leave, and compensation for loss of employment rights. The tax treatment varies by component. The element that is a genuine redundancy payment benefits from the £30,000 exemption; other elements (such as notice payments) do not. See the severance pay calculator for a wider view of what a full exit package might look like.
From 6 April 2026, statutory redundancy pay is based on your age, years of continuous service (capped at 20), and weekly pay (capped at £751). The multiplier is 0.5 weeks' pay per year aged under 22; 1 week's pay per year aged 22–40; 1.5 weeks' pay per year aged 41 or over. The maximum statutory payment is £22,530.
Use the redundancy pay calculator to get your exact figure.
Statutory redundancy pay — and any enhanced payment from your employer — is tax-free up to £30,000 (HMRC rule, 2025–2026 tax year). The portion above £30,000 is taxed at your marginal income tax rate. National Insurance is not charged on redundancy pay at any level. The £30,000 threshold applies to the combined statutory + enhanced redundancy amount, not to other payments such as PILON or holiday pay.
PILON (Payment in Lieu of Notice) is what your employer pays you instead of requiring you to work your notice period. It is treated as normal salary — income tax and National Insurance both apply in full. It does not count toward the £30,000 redundancy tax-free threshold. Since 6 April 2018, all PILON payments are taxable regardless of whether your contract includes a PILON clause.
You qualify if you are an employee with at least 2 years of continuous service with the same employer and have been genuinely made redundant. You do not qualify if you are self-employed, if you left voluntarily, or if you unreasonably refused a suitable alternative role offered by your employer. Apprentices, share fishermen, and some domestic workers may also be excluded.
Yes — employers can offer enhanced (contractual) redundancy pay. Some use a higher multiplier, some remove the weekly pay cap, and some pay a flat number of weeks' salary. Check your employment contract and staff handbook. If enhanced terms are written into your contract, they are legally enforceable. The combined statutory + enhanced payment still benefits from the £30,000 tax-free threshold.
Any statutory holiday you have accrued but not taken must be paid out when you leave. This is calculated at your normal rate of pay. Holiday pay is taxable as earnings — it sits entirely outside the redundancy pay rules and the £30,000 exemption. Use the holiday entitlement calculator to estimate the number of days owed.
If your employer refuses to pay, or goes insolvent, you can apply to the government's Redundancy Payments Service through GOV.UK. You can also raise a claim at an employment tribunal. The deadline for tribunal claims is generally 3 months minus one day from the date of dismissal, so act quickly. Acas (0300 123 1100) can advise on the process and conciliation options before a tribunal claim is lodged.
Redundancy pay counts as capital, not income, for Universal Credit purposes. Lump-sum payments above the capital threshold (£6,000 for a single claimant) can affect how much Universal Credit you receive — amounts above £16,000 currently exclude you from UC entirely. PILON, by contrast, is treated as income and may delay the start of a Universal Credit claim. Check the DWP guidance on GOV.UK for the current rules.
If you have been notified of potential redundancy, start by calculating your statutory entitlement — it takes under a minute. Knowing the minimum figure gives you a baseline before any discussions with your employer about enhanced packages or settlement agreements.
From there, factor in notice pay (worked or PILON), holiday owed, and any pension contributions during the notice period. If the total redundancy payment is likely to exceed £30,000, speak to a tax professional before accepting a settlement, as the structure of the payment can affect how much tax you pay.
If you're thinking about what comes next — whether that's a mortgage, a career break, or starting something new — the house affordability guide may also be useful as you plan your finances after redundancy.
Calculate your redundancy pay in under 60 seconds — free, no sign-up
Open the Redundancy Pay Calculator →This is a general guide for the tax year 2025–2026 and reflects figures in force from 6 April 2026. For personalised advice, consult a qualified financial advisor, tax professional, or employment solicitor. Figures are sourced from GOV.UK and Acas and were verified in May 2026.