Voluntary redundancy — what will you actually receive?

Reviewed: September 2026

Voluntary redundancy packages are still made up of separate payment lines. Tax treatment depends on what each payment actually is — not the label on your offer letter.

Voluntary vs compulsory — tax works the same way

Whether redundancy is voluntary or compulsory, HMRC looks at the nature of each payment. Genuine termination compensation may be tax-free up to the combined £30,000 limit; notice pay and holiday are usually taxed as earnings.

Negotiating enhanced terms? See can I counter-offer a redundancy package? and compare two offers after tax.

Examples

Voluntary offer of £22,000 + £4,000 PILON

Enter each component separately. Enhanced or voluntary redundancy compensation may qualify for the £30,000 exemption; PILON usually does not.

Try the calculator with your figures →