Sources & methodology
Redundancy Take Home provides estimates for general information. It is not tax, legal or benefits advice. Rules below were checked in September 2026 against primary sources.
Payment classification
| Payment type | Tax treatment | UC treatment | Source |
|---|---|---|---|
| Statutory redundancy, enhanced redundancy, qualifying compensation | First £30,000 combined may be exempt; excess taxed at marginal rate (no employee NI on excess) | Capital when received | GOV.UK termination payments; HMRC EIM13505 |
| PILON / notice pay | Always taxable as earnings (PAYE + NI) | Earnings if received in UC assessment period | GOV.UK; HMRC EIM13874 (PENP) |
| Holiday pay, unpaid wages, bonus | Always taxable as earnings | Earnings if received in UC assessment period | GOV.UK |
£30,000 exemption
The first combined £30,000 of qualifying termination payments may be paid without income tax or employee NI. This applies to statutory redundancy, enhanced redundancy, and genuine compensation — not to PILON, holiday pay or wages. Amounts above £30,000 are taxed at your marginal rate. Employee NI does not apply to the excess redundancy element.
Source: HMRC EIM13505 — checked September 2026.
PENP (simplified)
Since April 2018, part of a severance payment may be reclassified as Post-Employment Notice Pay and taxed as earnings. Redundancy Take Home treats explicit PILON as taxable. If your employer embeds notice pay in a lump sum, enter PILON separately where possible. We do not calculate PENP automatically — employer payroll systems apply the statutory formula.
Source: HMRC EIM13874 — checked September 2026.
Statutory redundancy
Calculated using age bands (0.5 / 1 / 1.5 weeks per year), maximum 20 years, weekly pay cap. 2026/27 cap: £751/week (dismissals from 6 April 2026). 2025/26 cap: £719/week.
Source: GOV.UK redundancy pay — checked September 2026.
Universal Credit capital
| Capital level | Standard rule | Source |
|---|---|---|
| £6,000 or below | Disregarded — no tariff income | GOV.UK UC money & savings |
| £6,000.01 – £16,000 | Tariff income: £4.35 per month for each £250 (or part) above £6,000 | UC Regulations 2013 reg 72; Turn2us |
| Over £16,000 | Normally no UC entitlement under standard capital rules | GOV.UK |
Only net qualifying termination payments are added to household capital in our model. PILON, holiday pay and wages are classified as UC earnings — not capital.
Sources:GOV.UK UC money & savings;Turn2us redundancy — checked September 2026.
Universal Credit earnings (illustrative)
We do not calculate your Universal Credit award. Optional work allowance selection (none / £427 with housing / £710 without housing for 2026/27) drives an illustrative 55% earnings taper on estimated net pay only — not gross.
We do not calculate surplus earnings amounts. GOV.UK surplus rules require knowing when earnings reduce your award to zero and exceed £2,500 above that level.
Sources:GOV.UK UC and earnings;Citizens Advice UC calculation.
Illustrative transition steps
The calculator shows steps (payment received → if capital unchanged → thresholds to monitor). These are not UC assessment periods and not a 12-month forecast. Capital after payment assumes you do not spend or add savings unless you model that elsewhere.
Tax rates used
Central configuration in src/config/tax-years/ supports 2025/26 and 2026/27. Updated each April.
Sources: GOV.UK income tax rates; GOV.UK NI rates.
Limitations
- Does not model PENP automatically, pension contributions, injury payments, or non-resident exemptions.
- Tax estimates assume standard PAYE — your tax code, benefits in kind, and other income may change results.
- UC transition is illustrative — not assessment-period-based; not a forecast of future capital.
- Work allowance and earnings taper are optional illustrations only — not full entitlement modelling.
- Surplus earnings amounts are not calculated — only described per GOV.UK rules.
- Does not determine UC eligibility — only estimates capital band and tariff income under standard rules.