Redundancy Runway Calculator (UK 2025/26)

The statutory formula is age-banded and counts backwards from your current age: each year worked when you were 41+ earns 1.5 weeks, 22–40 earns 1 week, under 22 earns 0.5 weeks. It caps at 20 years. So for a 45-year-old with 10 years’ service, all 10 years fall in the 41+ band — that’s 15 weeks of capped pay.

For statutory redundancy the cap is mandatory — HMRC doesn’t let you use a higher figure. For enhanced elements, most employers use your actual weekly pay (uncapped). The calculator’s cap toggle lets you model both views. A 41+ employee earning £80k with 10 years of service gets the same £10,500 statutory as someone on £37k because both are at or above the cap.

Higher of statutory notice (1 week per year, max 12) or your contractual notice applies. If you work the notice, you keep earning and accruing — no extra tax. If your employer makes a PILON, it’s fully taxable as salary: Income Tax plus employee NI. Toggle PILON to see how much tax you’d pay and the real net you’d receive.

Split spend into essentials (mortgage/rent, bills, food, transport, minimum debt repayments, childcare) and the total figure including discretionary spend. The calculator then shows two runways. An essential runway shorter than 3–4 months is a red flag — push harder on the enhanced multiplier or tighten spend before leaving.

The slider goes 1.0x (pure statutory) to 4.0x. Start at your employer’s offered multiplier, then compare to the typical industry multiplier shown. If you’re below the industry norm on a similar-tenure role, you have a concrete negotiation anchor. Industry multiplier only affects enhanced redundancy, not statutory or notice.

The tool flags a runway that falls short of the median UK job-search duration (our estimate ~3–4 months based on ONS/Nomis labour-market data). It also calls out the weekly pay cap if you’re above it and whether PILON is pushing you into a higher tax band. Use these to decide whether to negotiate, accept, or push for a pension contribution route.

Bump monthly essential spend up by 10%, drop multiplier by 0.3x, and see if essential runway still beats 4–6 months. If yes, you have genuine margin. If no, negotiate harder or plan interim income (part-time work, contracting) to bridge the gap.

The multiplier ranges shown (finance 1.5–4.0x, technology 1.0–3.5x, professional services 1.0–3.0x, manufacturing 1.0–2.5x, public sector 1.0–2.0x, retail/hospitality 1.0–1.8x) are our estimates based on UK averages drawn from publicly reported redundancy-deal norms across major industries. They are rough guidance only — actual offers swing widely based on employer finances, your seniority, length of service, contract terms and local market conditions. Use them as a negotiation anchor, not a promise.

The 3–4 months median figure is our estimate based on UK averages informed by ONS Labour Force Survey flows and Nomis regional labour-market data for 2024–25. Your mileage will vary: in-demand tech or healthcare roles can land in 4–8 weeks; senior executive searches can easily stretch to 9+ months; specialist regional labour markets (e.g. niche manufacturing in a single town) can be far longer. Use the median as a lower-bound planning figure, not a realistic expectation.

Before 6 April 2018, contractual PILON was taxable but non-contractual PILON could often be paid through the £30,000 tax-free redundancy bucket. HMRC closed this with the Post-Employment Notice Pay (PENP) rules: all PILON is now fully taxable as earnings, with both Income Tax and employee NI. If your contract lacks a PILON clause and your employer still wants you gone quickly, they technically owe you damages for breach — but HMRC will still apply PENP unless the payment is purely compensatory and carefully structured. For most employees the simple rule holds: PILON costs you 30–50% in tax and NI, whereas a genuinely redundant payment gets the first £30k tax-free.

If your redundancy package exceeds £30,000, the excess is taxable at your marginal rate. One of the most effective tax optimisations is to ask your employer to pay the excess directly into your workplace pension scheme — this generally escapes both Income Tax and NI, and uses your pension annual allowance (£60,000 for most employees, or more if you have unused allowance from the last three tax years). Example: a £100k redundancy with £70k above the tax-free threshold, paid to pension at 40% marginal rate, saves £28,000 in tax. Watch out for annual allowance tapering if your total income exceeds £260,000, and for the Money Purchase Annual Allowance if you’ve already flexibly accessed a DC pension.

If you’re considering leaving the UK shortly after redundancy, be aware of the temporary non-residence (TNR) rules: gains and certain income received while non-UK-resident for fewer than 5 full tax years can be taxed on your return. Redundancy pay received before you leave is fully UK-taxed under the rules here; redundancy received after you become non-resident can be treated differently but usually stays UK-taxed because it’s earnings for UK duties. See our Moving Abroad UK Tax & Residency Calculator if an international move is on the table.

Next steps depend on what the runway shows. If it’s short, sharpen your pay negotiation with the Real Living Wage Gap Calculator before taking the next role. If relocation is on the table, model the tax shift with Scotland vs rUK Income Tax or an international move with Moving Abroad UK Tax & Residency.