NHS Redundancy Pay & Tax Calculator

The NHS Redundancy Calculator works out your Agenda for Change Section 16 payment: one month's pay for each complete year of reckonable service, up to 24 years. A £23,000 salary floor and £80,000 cap apply to full-time equivalent earnings, no payment exceeds £160,000, and the first £30,000 is tax free.

Free. No email address required.

Covers Agenda for Change England. Scotland, Wales and Northern Ireland see the statutory result — read the scope note below.

Statutory rates: £751 weekly cap, £22,530 maximum, for redundancies on or after 6 April 2026 (GOV.UK).

Calculate your NHS redundancy pay

Enter your details below. The NHS Redundancy Calculator returns your contractual payment under Section 16, the statutory figure for comparison, and your estimated net amount after tax.

Employment
Annual full-time equivalent salary · High Cost Area Supplement · Contracted hours per week · Nation

Dates
NHS employment start date · Expected redundancy date · Date of birth

Service history
Any break in NHS service over one week? · Any break over 12 months? · Have you received a previous redundancy or loss of office payment? · Have you received a MARS severance payment? · Have you already taken NHS pension benefits?

Tax accuracy
Gross earnings already received in this tax year · Notice arrangement: working your notice, or payment instead of notice

Your results show eight figures: the NHS contractual payment, the statutory comparison, the difference between them, the reckonable years used with any excluded years listed, the month's pay figure and which method produced it, your tax-free portion and taxable excess, the estimated tax, and your estimated net payment.

You can copy, print or download your result as a PDF.

What this calculator assumes

The figures rest on eight assumptions. Check each one against your own situation.

• You are employed on Agenda for Change terms in England under Section 16.
• You hold one NHS employment.
• England tax rules apply to your pay.
• You have no other income beyond your NHS salary.
• You have entered your full-time equivalent salary, not your actual part-time pay.
• Your redundancy is genuine under Section 16.
• Your employer applies no local enhancement.
• Your service history answers are accurate.

Eight things this calculator does not model:

• Contractual redundancy terms in Scotland, Wales or Northern Ireland.
• Medical and dental grades, or Very Senior Manager contracts.
• Bank staff arrangements.
• Pension values, or the cost of buying out an actuarial reduction.
• Concurrent NHS posts.
• Local trust enhancements.
• Accrued annual leave payments.
• Your exact PAYE deduction on the day the money is paid.

How is NHS redundancy pay calculated?

NHS redundancy pay equals one month's pay for every complete year of reckonable service, capped at 24 years. Month's pay is whichever is higher: 4.35 times a week's pay, or one twelfth of your annual salary at termination. Fractions of a year are disregarded entirely.

These rules sit in paragraphs 16.7, 16.8 and 16.9 of the NHS Terms and Conditions of Service Handbook.

A member of staff with 9 years and 11 months of reckonable service is paid for 9 years. The extra 11 months add nothing to the total.

Which month's pay does the calculation use?

Your employer must use whichever of the two methods pays you more. The first is 4.35 times a week's pay, calculated under sections 221 to 224 of the Employment Rights Act 1996. The second is one twelfth of your annual salary on the date your employment ends (NHS Employers).

For staff on a flat annual salary, the two methods produce almost the same number. The 4.35 route matters when your weekly pay includes elements that your headline annual salary does not capture.

Pay is worked out on your normal working hours. Unsocial hours payments are included. Overtime is excluded, unless your contract obliges your employer to provide it and obliges you to work it (NHS Employers).

High Cost Area Supplement is the one element the published guidance does not settle. Section 16 defines a month's pay by reference to annual salary and to a week's pay under the Employment Rights Act, and neither NHS Employers nor the handbook states plainly whether the supplement forms part of that figure. Ask your HR team to confirm in writing whether your supplement is included before you rely on any total.

Is there an official NHS redundancy calculator on GOV.UK?

No NHS-specific redundancy calculator exists on GOV.UK. The government tool covers statutory redundancy pay only and applies age-based weekly multipliers, not Agenda for Change terms (GOV.UK).

NHS Employers publishes the Section 16 rules as written guidance with a set of worked FAQs. It does not operate a calculator for staff (NHS Employers).

The NHSBSA redundancy calculator is a spreadsheet on the Employer Hub, built for employers preparing estimates. Employers also run figures through Pensions Online (NHSBSA).

Staff searching for an official downloadable file are usually looking for one of those two employer resources. Neither is designed for you to complete yourself.

How does NHS redundancy pay compare with statutory redundancy pay?

The statutory figures apply to redundancies on or after 6 April 2026 (GOV.UK). The contractual figures come from paragraph 16.8 of the handbook.

Statutory redundancy pay is your legal floor. For almost every member of staff on Agenda for Change terms in England, the contractual figure is the larger one and the one you receive.

Which years of your NHS service actually count?

Two different service measures decide your payment. Continuous service determines whether you qualify at all and must reach two years. Reckonable service determines how many years you are paid for, and it is often shorter than the time you have worked.

Mixing the two up is the most common reason a personal estimate comes out too high.

What is the difference between continuous and reckonable service?

The one-week continuity rule and the 12-month reckonable rule come from NHS Employers. Paragraphs 16.5 and 16.9 set them out in the handbook.

The two thresholds catch people out because they point in different directions. A seven-month gap between NHS jobs breaks your continuous service, but the earlier employment still counts as reckonable service once you have built two fresh years.

Which service is excluded from your redundancy payment?

Four categories of service do not count towards your payment.

1. Service already counted for a previous redundancy or loss of office payment. Paragraph 16.6 blocks the same years being paid twice.
2. Service for which you have already received NHS pension benefits. Also paragraph 16.6.
3. Service covered by a MARS severance payment. Paragraph 20.18 offsets it against any later redundancy payment.
4. Employment before a break of more than 12 months.

All four are listed by NHS Employers and set out in the handbook.

Several short breaks are treated differently from one long one. Where the gaps add up to less than 12 months, the periods of employment between them count as reckonable service. The breaks themselves never count (NHS Employers).

Retiring and returning falls squarely under exclusion two. If you drew NHS pension benefits and then came back to work, only the service since your return counts. The same applies to partial retirement: the service you drew benefits on is spent.

Where do you find your continuous service date?

Your continuous service date sits on your Electronic Staff Record, in your personal employment details. Payroll uses the date recorded there, not the date you remember starting.

Three steps to confirm it:

1. Open your ESR record and note the continuous service date shown.
2. Check it against your contract and any transfer letters between NHS organisations.
3. Ask HR to confirm the figure in writing before you rely on any estimate.

The date on your record is a starting point, not a conclusion. ESR holds the date your continuous service began, but it does not itself strip out years already paid out in an earlier redundancy or already used for pension benefits. Those deductions are applied when your employer prepares your redundancy calculation, which is why a written breakdown matters more than a screen reading.

Why is your figure different from a colleague's?

Two people on the same band, the same salary and the same contracted hours can receive very different payments. Reckonable service explains nearly all of the difference.

One of you may have a break over 12 months in your record. One of you may have taken a redundancy payment years ago. One of you may have retired and returned. One of you may have accepted a MARS payment.

Comparing totals with a colleague tells you almost nothing. Comparing reckonable years tells you everything.

How do the salary caps and part-time hours change your payment?

Three limits apply to every NHS redundancy payment. Earnings below £23,000 full-time equivalent are treated as £23,000. Earnings above £80,000 full-time equivalent are treated as £80,000. No payment exceeds £160,000, pro-rated for part-time staff.

All three limits sit in paragraph 16.8 of the handbook.

How is part-time redundancy pay pro-rated?

Part-time staff receive a proportion of the full-time figure, worked out in four steps.

1. Establish your full-time equivalent salary.
2. Apply the £23,000 floor or the £80,000 cap to that FTE figure.
3. Calculate the full-time payment.
4. Multiply by your FTE fraction, which is your contracted hours divided by 37.5.

NHS Employers publishes a worked example of the cap in action. An employee works 18.75 hours per week, which is 0.5 FTE, and earns £50,000. Their full-time equivalent earnings are £100,000, so the £80,000 cap applies. They have more than 24 years of service:

(£80,000 ÷ 12 × 24) × 0.5 FTE = £80,000 (NHS Employers)

The order matters. Applying the cap to the £50,000 actual salary instead of the £100,000 FTE salary produces a very different and incorrect answer.

What happens if you earn under £23,000?

The floor raises your payment rather than restricting it. Staff earning below £23,000 FTE have their redundancy calculated as though they earned £23,000, pro-rated for part-time hours (NHS Employers).

A member of staff on £20,000 FTE with 6 years of reckonable service is paid on £23,000. That is £1,916.67 per month, giving £11,500 rather than the £10,000 their actual salary would suggest.

When does the £160,000 ceiling apply?

The ceiling binds at the top of the scale. Twenty-four years on the capped £80,000 salary produces exactly £160,000, so no full-time member of staff can be paid more, regardless of length of service or seniority.

The ceiling is pro-rated for part-time staff in the same way as the payment itself. A member of staff working 0.5 FTE has a maximum of £80,000, which is why the worked example above lands precisely on that figure.

How much of your NHS redundancy is taxed?

The first £30,000 of a genuine NHS redundancy payment is free of income tax and National Insurance. Everything above £30,000 is added to your taxable income for that tax year and taxed at your marginal rate (NHS Employers, GOV.UK).

Your employer pays Class 1A National Insurance on the amount above £30,000. You do not (GOV.UK).

Why is your tax bill higher than the £30,000 rule suggests?

The taxable part of your payment stacks on top of the salary you have already received in the same tax year. It does not start from zero.

For 2026 to 2027 the bands are: 20% on taxable income from £12,571 to £50,270, 40% from £50,271 to £125,140, and 45% above £125,140. The personal allowance falls by £1 for every £2 of income above £100,000 and reaches zero at £125,140 (GOV.UK).

Timing changes the answer. A member of staff leaving in March has received close to a full year of salary before the payment lands. The same person leaving in April has received almost none. The gross figure is identical. The net figure is not.

That is why this calculator asks what you have already earned this tax year. Without it, a payment that pushes you from the 20% band into the 40% band is shown at the wrong rate.

Scottish taxpayers have different bands and rates (GOV.UK). This calculator applies England rules.

What is PENP and does it affect your payment?

Post-Employment Notice Pay is the part of a termination payment that represents notice you did not work. It is taxed as general earnings and does not benefit from the £30,000 threshold (HMRC EIM13876).

PENP arises when you receive no notice, or less notice than you are contractually or statutorily entitled to. It represents the basic pay you would have received had you worked the notice you were owed. Your employer must apply the PENP formula whether or not your contract contains a payment in lieu of notice clause (HMRC EIM13876).

Two consequences follow, and both reduce your net figure.

First, PENP is stripped out before the £30,000 exemption is applied. Only the remainder is measured against the threshold. Second, you pay both income tax and National Insurance on it, which you do not pay on the exempt portion (GOV.UK).

PENP does not apply to statutory redundancy pay (GOV.UK).

If you work your full notice period, no PENP arises. This calculator asks about your notice arrangement for that reason, but it does not compute the PENP figure itself. Your employer works that out and must tell you the amount.

Can you pay redundancy into a pension to reduce the tax?

Yes. Contributions your employer makes to a registered pension scheme as part of your termination payment are free of tax and National Insurance. Tax applies only to employer contributions above the Annual Allowance (GOV.UK).

The arrangement has to be made by your employer as part of the termination, and it has to be agreed before the money is paid to you. Once the payment reaches your bank account as cash, this route is closed.

Ask your HR team whether your employer will make the contribution directly, and check your Annual Allowance position first (GOV.UK). This calculator does not model pension contributions.

Why does your first payslip deduct too much tax?

Termination payments made after your P45 has been issued are taxed under an emergency code, which assumes a pattern of income you will not actually receive.

The emergency codes from 6 April 2026 are 1257L W1, 1257L M1 and 1257L X (GOV.UK). A month 1 code treats the payment as though you will receive the same amount every month for a year, which pushes far more of it into the higher bands than belongs there.

The deduction on the payslip is not the final position. Check your tax code and contact HMRC if the figure looks wrong (GOV.UK).

Should you take your NHS pension early instead?

Members who have reached minimum pension age can exchange their redundancy lump sum to buy out the actuarial reduction on early pension benefits. The lump sum pays for the reduction. Where the cost exceeds the lump sum, benefits are proportionally reduced and no cash remains.

Paragraphs 16.12 to 16.15 of the handbook set out the mechanism. You have three options:

1. Keep the lump sum and defer your pension to a later date.
2. Keep the lump sum and take your pension early with an actuarial reduction applied.
3. Use the lump sum to buy out all or part of that reduction.

Under option three, if the lump sum is worth more than the cost of the buy-out, you receive the difference in cash. If it is worth less, your pension is reduced by the remainder, and you may top up the shortfall from your own funds before the pension is paid (NHS Employers).

Four conditions must be met to qualify:

• You are an active member of the NHS Pension Scheme in the employment being terminated.
• You have at least two years' continuous service.
• You have at least two years' qualifying membership of the scheme.
• You have reached minimum pension age, which is 55 for most members. A protected age of 50 applies to members who held the right to take reduced benefits at that age on 5 April 2006.

The figures for this decision come from NHS Pensions, not from any web calculator. Employers request estimates through Pensions Online. Individual estimates use form AW295, cost nothing, and carry a 40 working day service level agreement (NHSBSA).

Is your offer MARS or genuine redundancy?

MARS is a mutually agreed resignation under Section 20 of the handbook. Redundancy sits under Section 16. The two are separate arrangements with different consequences.

Service covered by a MARS severance payment is excluded from reckonable service under paragraph 20.18, and the payment is offset against any later redundancy (NHS Employers).

Check which one you have been offered before you respond. The paperwork will name the section. If it does not, ask.

Does voluntary redundancy pay less than compulsory?

Voluntary and compulsory redundancy use the same Section 16 formula. One month's pay per complete year of reckonable service applies to both, with the same floor, cap and ceiling. The route you take does not change the calculation.

Section 16 draws no distinction between the two, and the handbook sets out a single method for calculating the lump sum.

Two things can vary in practice. Some employers add local enhancements to voluntary schemes at their own discretion, which this calculator does not model. And the timing of a voluntary exit may differ from a compulsory one, which changes which tax year your payment lands in.

Ask your HR team whether any local enhancement applies to your scheme, and get the answer in writing.

Common mistakes when estimating NHS redundancy pay

Nine errors account for most wrong estimates.

Using total service instead of reckonable service. The largest single cause of overestimates. On an HR breakdown, look for two separate figures: your continuous service date and the reckonable years used in the calculation. Where the second is smaller than the first implies, the difference is an exclusion, and you are entitled to ask which one.

Applying the £80,000 cap to actual part-time pay. The cap applies to your full-time equivalent salary first. The result is then pro-rated.

Ignoring the £23,000 floor. Staff earning less than £23,000 FTE are frequently underestimating their own payment.

Forgetting that part-years are disregarded. Eleven additional months add nothing.

Using an out-of-date statutory weekly cap. £751 applies from 6 April 2026. Earlier figures are lower (GOV.UK).

Assuming the whole payment is tax free. Only the first £30,000 is.

Overlooking earnings already taken this tax year. The excess above £30,000 stacks on your existing income and may reach a higher band.

Treating a MARS offer as redundancy. Different section, different consequences for future service.

Taking another NHS post too soon. Staff who obtain suitable alternative NHS employment with no break, or a break not exceeding four weeks, are not entitled to a redundancy payment (NHS Employers).

Special situations that change the calculation

What if you have two NHS jobs?

Concurrent posts are calculated separately. Each post uses its own whole time equivalent fraction, and the reckonable service applied to each is worked out on its own terms.

NHS Employers publishes several worked scenarios covering concurrent roles, including cases where one post is made redundant before the other (NHS Employers). This calculator handles one employment only. Ask HR for a separate figure for each post.

Are bank staff entitled to NHS redundancy pay?

The handbook does not cover contractual redundancy arrangements for bank staff. Entitlement is a matter for individual employers and depends largely on the terms of your local contract (NHS Employers).

If you work on the bank, the Section 16 figures on this page may not apply to you at all. Check your contract before treating any estimate as your entitlement.

Do fixed-term contracts qualify?

Yes. Where a fixed-term contract ends by reason of redundancy and you have two years' continuous service, you are treated in the same way as an employee on a permanent contract (NHS Employers).

Will you be paid your notice as well?

Notice pay is separate from your redundancy lump sum. It is taxed as earnings and does not draw on the £30,000 exemption (GOV.UK).

Your notice length depends on your contract. Ask HR to confirm both the length and whether you will work it or be paid instead, because that determines whether PENP applies.

Is your accrued annual leave paid on top?

Holiday pay is taxed as earnings and is not part of the £30,000 exemption (GOV.UK).

Any untaken leave you are owed is normally settled separately from your redundancy payment. Ask payroll for the leave figure as a distinct line so you can see what is exempt and what is not.

When will the payment reach your account?

Payment timing is set by your employer's payroll cycle and your termination date, and it varies between organisations.

Ask HR for the payment date in writing. If you are planning around a mortgage payment or a bill, the date the money arrives matters as much as the amount.

How to check your figure against an official estimate

Five steps take you from an estimate to a confirmed figure.

1. Request a written breakdown from HR. Ask for four things by name: your continuous service date, your reckonable years, the month's pay figure used, and which of the two calculation methods produced it.
2. Compare each line against Section 16. Where reckonable years are lower than you expected, the cause is one of the four exclusions. Ask which one applies and on what date.
3. Ask your employer to run a Pensions Online estimate if you are considering the pension option.
4. Contact your union representative. UNISON, RCN and Unite all support members through redundancy calculations.
5. Seek independent guidance from ACAS or Citizens Advice if the figures still do not reconcile.

A correct breakdown shows the working, not just a total. If you receive a single number with no service figures behind it, you cannot check it, and you are entitled to ask for the detail.

About this calculator

The NHS Redundancy Calculator applies Section 16 of the NHS Terms and Conditions of Service Handbook for staff on Agenda for Change terms in England.

Contractual figures come from the handbook and NHS Employers. Statutory figures come from GOV.UK. Tax treatment follows GOV.UK guidance on termination payments and HMRC EIM13876.

This tool produces an estimate. It is not financial or legal advice. Confirm your entitlement with your employer, your union or NHS Pensions before making a financial decision.

Rates verified against GOV.UK and NHS Employers on the date shown above. If you spot a figure that has changed, tell us and we will correct it.

NHS redundancy pay: frequently asked questions

How much redundancy will I get for 20 years of service?

Twenty complete years of reckonable service produces 20 months' pay under Agenda for Change Section 16. Your monthly figure uses FTE earnings capped at £80,000, so the maximum for 20 years is £133,333, pro-rated if you work part-time.

Is NHS redundancy tax free?

The first £30,000 of a genuine NHS redundancy payment is free of income tax and National Insurance. Amounts above £30,000 are added to your taxable income for that year and taxed at your marginal rate of 20%, 40% or 45%.

What is the NHS redundancy package for 2026?

Section 16 terms are unchanged for 2026/27: one month's pay per complete year of reckonable service, maximum 24 years, £23,000 floor, £80,000 cap, £160,000 ceiling. Statutory rates rose to £751 weekly and £22,530 maximum from 6 April 2026.

What are the rules for NHS redundancy?

Two years' continuous NHS service qualifies you. Payment equals one month's pay per complete year of reckonable service to a 24-year maximum. Misconduct dismissal, or suitable alternative NHS employment starting within four weeks of termination, removes entitlement.

Does previous NHS redundancy affect a new payment?

Service already counted for a previous redundancy or loss of office payment cannot be counted again under paragraph 16.6. Service covered by a MARS severance payment, or already used for NHS pension benefits, is also excluded.

Is voluntary redundancy pay the same as compulsory?

Voluntary and compulsory redundancy use the identical Section 16 formula: one month's pay per complete year of reckonable service. Some trusts add local enhancements to voluntary schemes at their discretion, but the base calculation does not change.