Redundancy & leaving a job
Redundancy pay tax calculator
The first £30,000 of a redundancy or severance package is tax-free, and you pay no National Insurance on any of it. Only the part above £30,000 is taxed — as income, on top of what you've already earned this year. Put in your package and your other income to see exactly what you'll pay and what you keep for 2026/27. Worked in your browser; nothing is sent anywhere.
Your redundancy package
Rough figures are fine. Enter the redundancy and severance pay that qualifies for the £30,000 exemption, plus your other taxable income for the year so the taxable part is taxed at the right rate. England, Wales or Northern Ireland.
How redundancy is taxed
A redundancy or severance payment is treated differently from your normal wages. For 2026/27:
- The first £30,000 is tax-free. Statutory redundancy pay, any enhanced or additional redundancy your employer adds, and qualifying non-cash benefits share a single combined £30,000 exemption.
- No National Insurance for you. You pay no employee National Insurance on a redundancy payment, even on the part above £30,000. (Your employer pays Class 1A National Insurance on the excess.)
- Above £30,000 is taxed as income. The excess is added on top of everything else you've earned this tax year, so it's taxed at 20%, 40% or 45% depending on where it lands — and it can tip you into the £100,000 Personal Allowance taper, a 60% effective rate.
Wages, holiday pay and PILON are not part of the £30,000
Unpaid wages, holiday pay, bonuses and pay in lieu of notice (PILON / PENP) are taxed and NI'd in full as normal earnings — they don't use up your £30,000 exemption. Put those under other taxable income above so the taxable slice of your redundancy is taxed at the right marginal rate.
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Common questions
How much tax will I pay on my redundancy?
Nothing on the first £30,000 — that's tax-free and NI-free. Only the part above £30,000 is taxed, as income stacked on top of what you've already earned this year, so it's taxed at 20%, 40% or 45% depending on your total. For example, a £50,000 package with a £50,000 salary already earned has £20,000 taxable, mostly at 40%, giving about £7,946 of tax. Enter your own figures above for an exact number.
Is redundancy pay taxable in the UK?
Genuine redundancy and severance pay is tax-free up to a combined £30,000, and there's no employee National Insurance on it at all. Anything above £30,000 is taxable as income. Statutory redundancy pay is always inside the exemption. Wages, holiday pay, bonuses and pay in lieu of notice are separate — they're taxed in full as normal earnings.
Do I pay National Insurance on redundancy pay?
No. As the employee you pay no National Insurance on a redundancy payment, even on the amount over £30,000. Your employer pays Class 1A National Insurance on the excess, but that doesn't come out of your money.
Why is the tax on my redundancy so high?
Because the taxable part stacks on top of the salary you've already earned this year, it's often taxed entirely at 40% — and if it pushes your total income over £100,000 you also lose Personal Allowance, giving a 60% effective rate on part of it. Paying some of the payout into a pension can pull it back out of the higher band.
Might I get some of the tax back?
Possibly. If you're made redundant partway through the tax year and don't work for the rest of it, your total income may end up lower than the payroll tax on the redundancy assumed, so you could be owed a refund after the tax year ends. If you go self-employed instead, your whole year's tax is settled through Self Assessment.
Does this work for Scotland?
The £30,000 exemption and the no-NI rule are UK-wide, but Scottish taxpayers pay Income Tax on different bands and rates, so the tax figure here won't match. This calculator uses the England, Wales and Northern Ireland Income Tax bands for 2026/27.
Using your payout to go self-employed?
A lot of people take a redundancy cheque and turn it into a fresh start — freelancing, contracting or a small business. The moment you do, HMRC wants a Self Assessment return, and your tax is no longer taken off before you're paid: you have to work it out and set it aside yourself. The paid Self Assessment Tax Estimator does exactly that — it stacks any leftover employment income, your new self-employment profit and everything else, and works out the whole bill, the Class 4 National Insurance and the monthly amount to bank, so your first January deadline holds no surprises.
- Self Assessment Tax Estimator 2026/27 — your complete bill, employment plus self-employment plus other income, with the set-aside and payment-on-account dates worked out for you.
- Freelance Day-Rate & Profit Calculator — work backwards from the take-home you need.
- Rental Property ROI & Yield Calculator — if you're putting the payout into a buy-to-let.
- Invoice Tracker & Log — paid, outstanding and overdue, automatically.
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Get the Tax Estimator — £9 →£9 on its own, or all four tools for £19, with a 14-day money-back guarantee.