Redundancy pay calculator — what you keep, and the pension move

The first £30,000 of a genuine termination payment is tax-free and none of it bears employee National Insurance. The excess stacks on top of everything you've earned this tax year at real bands — which is exactly where a redundancy in a good year springs the £100k 60% trap. This calculator prices it on the Hundred Summers app's own band functions, and shows what sacrificing the excess into your pension saves. Your figures never leave your browser.

The rules that decide the bill

Three categories matter. Genuine termination pay (statutory redundancy plus any enhanced or ex-gratia amount) gets the £30,000 exemption and pays no employee NI at any level. PILON, holiday pay and bonuses are ordinary salary — taxed and NI'd in full, always, whatever the paperwork calls them. And the excess over £30,000 is income in the year you receive it, stacked on months of salary already earned — the timing alone can push an ordinary earner into bands they've never seen.

That stacking is also the opportunity: employer contributions to your pension aren't income at all, so redirecting the excess before payment avoids the tax outright — at 40–60% relief, redundancy is often the best-relieved pension contribution of a working life (mind the £60,000 annual allowance and carry-forward). Expect rough initial withholding under an emergency code, reclaimed later. The full Hundred Summers plan can model the whole event — payment, employment gap, pension sacrifice and the effect on every later year. See also the redundancy tax guide.