UK Statutory Redundancy Pay Calculator 2026

How is Statutory Redundancy Pay Calculated?

Statutory redundancy pay in the UK is calculated using three factors: your age, your length of continuous service (up to a maximum of 20 years), and your average weekly gross pay (capped at £751 per week in England, Scotland and Wales from April 2026). The amount of pay per year of service depends on your age during each year worked.

UK Redundancy Pay Rates 2026

Rates effective 6 April 2026. Northern Ireland cap is £749/week (max £22,470).

How Statutory Redundancy Pay Is Built Up

Statutory redundancy pay is calculated from three things: your age during each year of service, your weekly pay, and how long you have worked there. You need at least two years' continuous service to qualify at all.

The age bands are what make it non-obvious. Each full year of service earns half a week's pay for years worked under 22, one week's pay for years worked between 22 and 40, and one and a half weeks' pay for years worked at 41 or over. Because the entitlement is assessed year by year, someone whose employment spans a birthday accrues at different rates within the same job — which is why a simple "years × weeks" estimate is usually wrong.

Two caps then apply. Weekly pay counts only up to £751 in England, Wales and Scotland (£749 in Northern Ireland), and only the most recent 20 years of service are counted. Anyone earning well above the cap will find the statutory figure is far below a fifth of their actual salary — the cap, not the length of service, is usually the binding constraint.

Tax, and the £30,000 Threshold

Genuine redundancy payments are tax-free up to £30,000, and statutory redundancy pay is always treated as genuine. Above that threshold the excess is taxed as income at your marginal rate, and since a large payment often lands in a single month, PAYE frequently over-deducts at first — that is usually reclaimed later rather than lost.

The exemption is narrower than people expect. It covers compensation for losing the job itself, not money you were owed anyway. These are taxed in full as normal earnings:

• Pay in lieu of notice. Since the PENP rules, notice pay is taxable whether or not your contract provides for it.
• Accrued holiday pay. Untaken leave is paid out as ordinary earnings and taxed normally.
• Outstanding salary and bonuses up to your leaving date.

National Insurance is not charged on the redundancy element at all, even above £30,000 — only income tax applies to the excess. One planning point worth knowing: redirecting part of a large payment into a pension can keep taxable income below a threshold such as £100,000, where the personal allowance begins to taper.

Statutory Is a Floor, Not the Offer

The figure this calculator produces is the legal minimum. Many employers pay enhanced redundancy — through a contractual scheme, a collective agreement, or simply as part of a settlement — and those terms can be considerably more generous, sometimes a month's pay per year of service with no weekly cap. Always check your contract and staff handbook before assuming the statutory number is the offer.

You are also entitled to more than money: a proper consultation process, notice or pay in lieu of it, and reasonable time off to look for work. If you are asked to sign a settlement agreement waiving your right to claim unfair dismissal, the employer must contribute towards independent legal advice — and that advice is the point at which to test whether the amount is reasonable, because signing closes off a tribunal claim permanently.

Frequently Asked Questions