Redundancy pay after tax calculator

Enter your statutory redundancy pay, any extra redundancy or severance pay, any pay in lieu of notice and your salary so far this tax year. The calculator shows how much you keep after Income Tax and National Insurance, and which part of the money is taxed.

Your redundancy pay after tax

£13,728.00

You keep £13,728.00 of the £14,400.00 paid to you (95.3%)

Your details

Statutory redundancy pay

Before tax

Other termination pay

Extra redundancy or severance pay, before tax

Pay in lieu of notice

Paid instead of working your notice. Taxed as earnings

Salary this tax year

Before tax, for the tax year

Where you pay income tax

Student loan Postgraduate loan as well

Your redundancy payment
	Amount
Statutory redundancy pay	£8,000.00
Other termination pay	£4,000.00
Pay in lieu of notice	£2,400.00
Total paid to you	£14,400.00
Tax-free limit for a termination payment	£30,000.00
Tax-free part	£12,000.00
Taxed as income	£0.00
Income Tax	£480.00
National Insurance	£192.00
Student loan	£0.00
You keep	£13,728.00

How this was worked out

Termination payment: £8,000.00 + £4,000.00 = £12,000.00.
Statutory redundancy pay and other termination pay share one tax-free amount of £30,000.00.
Tax-free part: the lower of £12,000.00 and £30,000.00 = £12,000.00.
Taxed as income: £12,000.00 − £12,000.00 = £0.00.
Pay in lieu of notice is earnings, not part of the termination payment: £2,400.00 is taxed, and National Insurance is taken from it.
Income Tax on your salary alone, £40,000.00: £5,484.20.
Salary, notice pay and the part taxed as income: £40,000.00 + £2,400.00 + £0.00 = £42,400.00 a year, so £5,964.20 of Income Tax.
Income Tax on the payment: £5,964.20 − £5,484.20 = £480.00.
National Insurance on your salary alone: £2,194.40; on your salary and the notice pay: £2,386.40; on the notice pay: £192.00. No employee National Insurance is taken from the termination payment.
Student loan on your salary alone: £0.00; on your salary and the notice pay: £0.00; on the notice pay: £0.00. Redundancy pay is left out of the student loan sum, so only the notice pay counts here.
You keep: £14,400.00 − £480.00 − £192.00 − £0.00 = £13,728.00.
Statutory redundancy pay is not subject to employee National Insurance.

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What the calculator assumes

You are an employee paid through PAYE, and your job ends in the 2026/27 tax year.
Statutory redundancy pay and any extra redundancy or severance pay share one tax-free amount. The working shows that amount.
The part above the tax-free amount is taxed as income, added on top of the salary you enter, at the rates for the nation you choose. The calculator takes no employee National Insurance from it.
Pay in lieu of notice counts as earnings, so it has Income Tax and National Insurance taken from it like normal pay.
You have the standard Personal Allowance and no other income.
If you choose a student loan plan, the working shows the repayment the calculator takes and the pay it takes it from.

Which parts of the money are tax-free

A redundancy package is often several payments added together. GOV.UK calls the whole thing a termination payment, and each part is taxed in its own way. Statutory redundancy pay, extra redundancy or severance pay from your employer, and things you keep such as a company laptop all count towards one tax-free amount. You usually pay no tax on them up to that amount. Above it, you pay Income Tax on the extra, and GOV.UK says your employer pays Class 1A National Insurance on that part.

Wages you are owed, holiday pay and bonuses are different. They are earnings, so they are taxed like any other pay, even when they arrive in the same final payment.

Notice you do not work

If you leave without working your notice, the pay for that notice is taxed in full as earnings. This applies to a lump sum paid in lieu of notice and to pay on gardening leave. It can also apply to part of a severance payment. GOV.UK calls that part post-employment notice pay, and your employer works it out.

For example, say you get £8,000 statutory redundancy pay and a £4,000 severance payment, and you are not asked to work four weeks' notice on £600 a week. The £2,400 you would have earned in those four weeks is taxed as pay, with National Insurance. The other £9,600 falls inside the tax-free amount. Post-employment notice pay never comes out of statutory redundancy pay.

Why your final payslip can show more tax

If the payment comes after your P45, your employer uses the 0T tax code. That code gives no Personal Allowance, so more tax comes off than the calculator shows. The same happens if the payment makes your income for the year higher than usual. If you think you have paid too much tax, GOV.UK says to contact HMRC. The tax code checker explains what 0T and the other codes mean.

What it leaves out

Payments your employer makes into your pension as part of the package, and legal costs paid straight to your solicitor. GOV.UK says you pay no tax or National Insurance on these, but pension contributions above the annual allowance are taxed.
Payments made because an injury, illness or disability means you cannot do your job.
The special rules for non-residents, people who work at sea and serving members of the armed forces.
Unpaid wages, holiday pay and bonuses, which are taxed as normal pay.

To work out the statutory amount before tax, start with the statutory redundancy pay calculator. The holiday entitlement calculator shows the paid holiday you build up in a year, including when you leave part way through it. For tax on a normal month's pay, use the take-home pay calculator. The student loan repayments page explains how each plan takes money from your pay.

Official guidance

Tax on termination payments on GOV.UK
Redundancy: tax and National Insurance on GOV.UK

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