Redundancy, notice pay and your final payslip

Start with the employer’s breakdown

Look for basic wages, overtime or bonus, unused holiday pay, notice pay, statutory redundancy, additional severance, and any repayments. A single “leaving payment” total is not enough to identify the right deductions.

Estimate your final payment in Pay Predictor. In Changes, choose “Leaving your job / redundancy — final pay”. Enter the actual final basic wages there; these replace the normal payment for that prediction.

Statutory and enhanced redundancy are different

Statutory pay is the legal minimum for eligible employees, usually after at least two years’ continuous service. Each complete service year counts at half a week under age 22, one week at ages 22–40, or one and a half weeks at age 41 or above, with at most 20 years counted. The age bands apply to the years of service, not all years at your age today.

For calculation dates from 6 April 2026 to 5 April 2027, the weekly cap is £751 in England, Scotland and Wales and £783 in Northern Ireland. The preceding 2025/26 caps were £719 and £749. Limits are reviewed each April: our date-based table does not reuse a limit for an unverified future year. Payroll must confirm the relevant date, including any statutory-notice extension.

Contractual or enhanced pay can be larger. Use the employer quote when available. Enter its statutory part and the additional amount separately; do not add the statutory amount again if the offer already includes it. GOV.UK statutory redundancy guidance; Northern Ireland guidance.

The £30,000 exemption does not cover notice pay

Qualifying redundancy and severance normally share a combined £30,000 Income Tax exemption. Previous instalments and qualifying non-cash benefits can use some of it. The exemption is not renewed for every payslip.

Pay in lieu of notice (PILON), ordinary wages, bonuses and unused holiday pay are normally subject to Income Tax and employee National Insurance. If payroll identifies notice-related pay inside enhanced severance (PENP), that portion also needs earnings treatment. Ask for its final, capped amount rather than assuming all severance is exempt. Pay Predictor applies the tax treatment to the PENP amount confirmed by payroll; it does not calculate the statutory PENP formula.

Qualifying compensation above the exemption is subject to Income Tax, but employer Class 1A NI is the employer’s cost; it is not employee NI deducted from that compensation. GOV.UK termination-payment tax guidance.

Check repayments before expecting the full amount

An employer loan may be recovered in full on leaving. Unreturned equipment, personal corporate-card spending or relocation support may also create agreed recoveries. Check the balance and your own agreement: a relocation repayment might be waived for redundancy. These are not automatic deductions for every employer.

In Pay Predictor, enter only the agreed amount due on that payday. Loan repayments stop at the remaining balance. If deductions exceed available pay, the result shows the shortfall to discuss with payroll rather than treating it as a negative bank payment.

Use the right dates and pension amount

The statutory calculation date selects redundancy limits. The scheduled payday selects payroll tax rules. They are different dates. Use the known pension contribution for the final payslip because compensation, notice and other earnings may have different pension treatment.

The final-pay feature currently covers the final regular payroll before the P45 is issued, with supported 2026/27 paydays. A later payment after a P45 uses different treatment, including an 0T tax code; ask payroll for the appropriate calculation. GOV.UK explains deductions and payments after a P45.

For tax estimates, using complete year-to-date taxable pay and tax paid can be more useful than an isolated-period estimate. The calculator estimates a payment, not your final annual tax bill or your legal entitlement.