Settlement Agreement Tax Calculator UK 2025

For information only. Tax estimates only — your actual tax liability depends on your full circumstances. Not legal or tax advice — full disclaimer. Consult a tax adviser or solicitor for personalised guidance.

PILON (payment in lieu of notice) Always fully taxable as earnings (income tax + NI)

Statutory redundancy pay Tax-free up to £30,000 (combined with ex-gratia)

Ex-gratia / compensation payment Tax-free up to £30,000 combined with redundancy pay

Holiday pay Always taxable as earnings

Other taxable elements (e.g. bonus arrears, commission)

Other income already received this tax year E.g. salary earned Jan–April before leaving. Used to calculate your marginal tax rate.

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Your tax breakdown will appear here

Enter your settlement details and click Calculate.

PILON —

Statutory redundancy pay —

Ex-gratia / compensation —

Holiday pay —

Other taxable elements —

Gross total —

✅ Tax-free portion

—

Tax-free amount —

Taxable amount —

Your marginal tax rate —

Estimated income tax due —

Estimated net (take-home) —

NI contributions are not applied to the termination payment (only to PILON, holiday pay and other earnings elements). This estimate does not include NI on earnings elements for simplicity. Full tax guide →

Want to maximise your tax-free amount?

A specialist employment solicitor can advise on structuring your settlement to maximise the tax-free element — for example, ensuring payments are correctly categorised and exploring pension contributions. Your employer typically pays your legal fees.

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Settlement Agreement Tax Calculator

Settlement components

Your income in this tax year

Your tax breakdown will appear here

Total settlement

Tax breakdown

✅ Tax-free portion

Higher rate taxpayer

Want to maximise your tax-free amount?

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Related guides

The £30,000 Tax-Free Rule Explained

What is a Settlement Agreement?