Termination Payment Tax Calculator
Calculate tax on a settlement or termination package: PENP taxed as earnings (tax + NIC), the £30,000 tax-free allowance and the taxed excess.
Daten geprüft · Juli 2026
What is PENP and why is it taxed?
The slice of your settlement covering notice you did not work. Since 2018 it is always taxed as earnings — income tax and employee NIC — regardless of how the agreement labels it.
Quelle: GOV.UK — Taxation of termination payments (gov.uk/guidance/taxation-of-termination-payments); EIM13874+; rates and thresholds 2025/26. · aktualisiert 2026
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Alles über Termination Payment Tax Calculator
📋Überblick+
Splits a termination package the way HMRC does (2025/26): Post-Employment Notice Pay — the part covering unworked notice — is always taxed as earnings with income tax AND employee NIC; the remainder (plus statutory redundancy) is tax-free up to £30,000 combined, and the excess bears income tax only (employer-only Class 1A NIC).
💡 Bewährte Vorgehensweisen
- A contractual PILON taxed through payroll reduces the PENP pound for pound.
- Working your notice (or being paid contractually for it) moves value out of PENP and into the £30,000 rule.
- The excess above £30,000 escapes employee NIC — but the employer pays 15% Class 1A on it.
🔢 Konkretes Beispiel
£50,000 package with 3 months' unworked notice at £4,000/month and £40,000 of other income: PENP £12,000 (tax £2,746 + NIC £856.20), remaining £38,000 → £30,000 free and £8,000 taxed at 40% — net received £43,197.80.
📖Anleitung+
So verwenden Sie diesen Rechner
- 1
Enter the termination package (excluding statutory redundancy) and any statutory redundancy separately.
- 2
Enter monthly basic pay and the months of notice not worked.
- 3
Deduct any contractual PILON already taxed through payroll.
- 4
Read the PENP, the tax-free amount and the net received.
📚Glossar+
- PENP
- Post-Employment Notice Pay: basic pay for the notice period not worked, minus contractual notice payments already taxed — always treated as earnings (tax + NIC), never tax-free.
- £30,000 exemption
- Statutory redundancy plus the non-PENP part of the package is tax-free up to £30,000 combined; the excess is taxed as earnings but bears no employee NIC.
ℹ️Quellen & Aktualisierung+
Letzte Datenaktualisierung
5. Juli 2026
Quellen und Referenzen
GOV.UK — Taxation of termination payments (gov.uk/guidance/taxation-of-termination-payments); EIM13874+; rates and thresholds 2025/26.
Die Daten dieses Rechners werden regelmäßig aktualisiert, um die neuesten offiziellen Sätze abzubilden. Im Zweifel konsultieren Sie die oben genannten offiziellen Quellen.
FAQ — Termination Payment Tax Calculator
What is PENP and why is it taxed?+
The slice of your settlement covering notice you did not work. Since 2018 it is always taxed as earnings — income tax and employee NIC — regardless of how the agreement labels it.
What is tax-free in a termination package?+
Statutory redundancy pay plus the genuinely ex-gratia part (after removing PENP), up to £30,000 combined. The excess is taxed as income but with no employee NIC.
How can I reduce the tax on my settlement?+
Work or get paid contractually for your notice (reduces PENP), consider employer pension contributions from the excess, and time the payment against your other income for the year.