Calculator · Full package
Full redundancy package calculator
A complete leaving package usually has four parts: statutory redundancy pay, statutory minimum notice (or PILON), accrued holiday and, often, an enhanced employer top-up. Each is taxed differently.
Age 41 and over · 6 years × 1.5 wk × £720£6,480.00
Age 22 to 40 · 6 years × 1 wk × £720£4,320.00
Total statutory redundancy pay£10,800
Calculated under ERA 1996 s.162 against the 2026-27 weekly cap of £751.Verify the 2026 Order reference at legislation.gov.uk before quoting in formal correspondence.
The four package elements, in order
- Statutory redundancy pay. ERA 1996 s.162 formula. Fully tax-free up to £30,000. Use the calculator above.
- Statutory notice / PILON. 1 week per year of service, capped at 12 weeks (ERA 1996 s.86). Taxed in full as earnings; sits OUTSIDE the £30k slice via PENP.
- Accrued untaken holiday. Statutory 5.6 weeks per year, pro-rated to leaving date (WTR 1998 reg.14). Taxed in full as earnings.
- Enhanced employer top-up. Whatever your contract or staff handbook says. Stacks with statutory redundancy in the £30k slice; the excess is taxed.
Worked example
Inputs: age 50, 12 years of service, £1,000/week gross, 3 months PILON, 8 days unused holiday, employer enhanced scheme paying statutory at 2x.
- Statutory redundancy: 9 years at 1 wk + 3 years at 1.5 wk = 13.5 weeks × £751 cap = £10,138.50.
- Enhanced top-up (2x statutory): an additional £10,138.50, bringing the redundancy-bucket total to £20,277.
- Notice (PILON): 12 weeks × £1,000 = £12,000. Taxed as earnings via PENP, NOT in the £30k slice.
- Holiday: 8/5 weeks × £1,000 = £1,600. Taxed as earnings.
- §401 bucket: £20,277 (statutory + enhanced) is under £30,000. Fully tax-free.
- Earnings bucket (taxed): £12,000 PILON + £1,600 holiday = £13,600.
The order that taxes are applied
HMRC applies PENP first. Any portion of the package equivalent to unworked notice is sliced out and taxed as earnings under F(No.2)A 2017 s.5. Holiday pay is taxed in full. What remains is then run against the £30,000 exemption in ITEPA 2003 s.401. The first £30k of that remainder is tax-free; the excess is taxed.
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