How statutory redundancy pay works
If you’ve been an employee for at least two years, you’re usually entitled to statutory redundancy pay. It’s worked out from your age across each year of service: 0.5 week’s pay for each full year worked under 22, 1 week for each year aged 22 to 40, and 1.5 weeks for each year aged 41 and over. Only full years count, up to a maximum of 20 years, and it’s the most recent 20 that are used.
The weekly pay cap and the £30,000 tax-free limit
For statutory redundancy pay, your weekly pay is capped at £751 from 6 April 2026, however much you earn. With the 20-year and 1.5-weeks limits, that means the most statutory redundancy pay can reach is £22,530. Anything your employer pays above the statutory amount is contractual. The first £30,000 of redundancy pay is tax-free, and only amounts above that are taxed as income.
The £30,000 tax-free rule
Redundancy pay is tax-free up to £30,000. Because the statutory maximum is £22,530, a purely statutory payment always arrives with no tax to pay. The £30,000 limit only matters where an employer adds an enhanced or contractual payment on top: the combined redundancy payment is tax-free to £30,000, and only the part above £30,000 is taxed as income and can attract National Insurance. Pay in lieu of notice and any accrued holiday pay are taxed separately and do not get the £30,000 exemption.
Frequently asked questions
How much redundancy will I get?
It depends on your age, your full years of service and your weekly pay. As a worked example, someone aged 45 with 10 full years of service and weekly pay above the £751 cap gets a mix of the age-41-plus rate (1.5 weeks a year) and lower rates for younger years, worked out year by year. The statutory maximum anyone can receive is £22,530, from 20 capped years at the £751 weekly limit. Enter your details above to see your own figure.
How much redundancy pay will I get?
Statutory redundancy pay is based on your age and full years of service: 0.5 week's pay per year worked under 22, 1 week per year aged 22 to 40, and 1.5 weeks per year aged 41 and over. Service is capped at 20 years and weekly pay is capped at £751, so the most you can receive is £22,530. Enter your details above for your figure.
Is redundancy pay taxed?
Statutory redundancy pay is tax-free up to £30,000. Only redundancy pay above £30,000, which usually only happens with a generous enhanced scheme, is taxed as income. So most statutory payments arrive tax-free.
How long do I need to have worked to get redundancy pay?
You usually need at least 2 years' continuous service as an employee to qualify for statutory redundancy pay. Below two years, there's no statutory entitlement, though your contract may still offer something.
What's the difference between statutory and enhanced redundancy pay?
Statutory redundancy pay is the legal minimum set by the government. Enhanced (or contractual) redundancy pay is a more generous scheme some employers offer on top, for example a higher weekly cap or more weeks per year. This calculator works out the statutory figure.
How is my weekly pay worked out for redundancy?
It's your gross average weekly pay, capped at £751 for statutory purposes from 6 April 2026. If your hours vary, it's usually averaged over the 12 weeks before you were given notice.
This tool is a guide, not legal or financial advice. Northern Ireland has separate rules.
