Hundred SummersRedundancy 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.
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Worked example
Computed when this page was built by the same engine that runs the calculator above, so the figures below and the live tool can never disagree. Change any input above to see your own.
| Inputs | |
|---|---|
| Salary | £55,000 |
| Redundancy package | £45,000 |
| Scottish taxpayer | No |
| Results | |
|---|---|
| Tax-free (the £30,000 exemption) | £30,000 |
| Taxable excess | £15,000 |
| Tax on the excess | £6,000 |
| Take-home from the package | £39,000 |
| Saved by paying the excess into a pension | £6,000 |
The next question
How long would my cash last? →Emergency fund calculator
Or answer it with everything else: the full Hundred Summers plan connects your pay, pensions, savings, property, tax and spending year by year, and stress-tests them across 500 simulated market histories.
Read the guide
- Redundancy: the tax playbook →The £30,000 exemption, what PILON really is, why the excess lands in your worst tax year, and the pension move that can save 40–60%: the decisions that must be made before the settlement agreement is signed.
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.