Notice Pay and PILON Calculator United Kingdom

What the notice pay calculator does

The calculator tells you how many weeks of notice you are owed, what they are worth in gross pay and how much is left after Income Tax and National Insurance. Notice is the figure in an exit package that people most often misunderstand.

When a job ends, two things matter: how long the notice period is, and what the payment looks like after tax. The first depends on employment law and your contract; the second depends on where the payment falls on top of the pay you have already had in the tax year. The calculator works out both.

It also handles notice that is partly worked and partly paid in lieu, a contractual notice period longer than the statutory minimum, and an extra redundancy or ex-gratia payment alongside the notice.

How statutory notice is built up

With less than a month of continuous service there is no statutory entitlement. From one month to two years the entitlement is one week. From two years it increases by one week for each complete year of service, up to 12 weeks. Four complete years means four weeks; twenty years means the 12-week maximum.

Two details catch people out. Only complete years count, so eleven months into your seventh year you are still on six weeks. And the statutory figure is a minimum: many contracts, especially for senior or specialist roles, give one or three months’ notice from the start. Where the contract is more generous, it applies, which is why you can enter it separately.

If you resign, your own notice obligation is usually the contractual period, and the statutory ladder does not apply in the same way. This tool covers notice your employer owes you.

Worked notice, garden leave and payment in lieu

You can work your notice, spend it on garden leave (still employed but away from work) or receive a payment in lieu of notice so that employment ends straight away. The tax treatment is the same for all three.

A payment in lieu, or PILON, raises the most questions because it arrives as a lump sum. Before April 2018 a non-contractual PILON could often be treated as falling within the tax-free termination exemption. That ended: the notice element of any termination package must now be identified and taxed as earnings, whatever the contract says or the payment is called.

So the notice part of your package is taxed as if you had worked those weeks, with full Income Tax and employee National Insurance. Entering the weeks worked and the weeks paid in lieu shows how the package splits, though the tax is the same either way.

How the tax and National Insurance are worked out

The calculator asks for the taxable pay you have already had in the tax year. It works out the tax on that alone, then on that plus the taxable parts of the package, and treats the difference as the tax on the package. It does the same for employee National Insurance.

A lump sum often crosses a band. A basic rate earner receiving three months’ pay can easily have part of it taxed at 40%. National Insurance works the other way: above the upper earnings limit the employee rate drops to 2%, so a well-paid leaver pays little National Insurance on the notice element.

For example, six weeks’ notice at £800 a week is £4,800. On top of a £41,600 salary it is all taxed at 20%, £960, with £384 of National Insurance at 8%, leaving £3,456.

Between £100,000 and £125,140 the personal allowance is withdrawn as income rises, which creates a marginal rate far above 40%. A notice payment that takes you into that range can be taxed at an effective rate that looks startling until you see why.

The tax-free termination exemption

Any part of a termination award that is not notice pay, accrued holiday or a contractual bonus is a genuine termination payment. The first £30,000 of it is exempt from Income Tax, and only the excess is taxed. Statutory redundancy pay counts towards the £30,000.

The exemption applies once per termination, not per payment. The whole termination award is free of employee National Insurance, though the employer pays Class 1A National Insurance on the part above £30,000. And the exemption cannot be stretched to cover notice pay, however a settlement agreement describes the sums.

Enter your redundancy or ex-gratia amount in the additional payment field and the calculator shows how much falls inside the exemption and how much is taxed. The taxable excess is charged Income Tax at your marginal rate but no employee National Insurance, which is why the two deduction lines behave differently.

Reading the results

The main figure is the net payment: gross notice pay plus any other termination payment, less Income Tax and National Insurance. Below it are the statutory notice weeks, the total weeks due after any contractual override, the gross notice value, the payment in lieu portion, the exempt amount and the two deduction lines.

The effective deduction rate is the share of the whole package taken in tax and National Insurance. It often surprises people, because it mixes a fully taxed notice element with an exempt redundancy element and can be anywhere from nothing to well over half.

• Check the statutory notice your length of service gives you.
• Value a payment in lieu of notice before agreeing to it.
• See how much of a redundancy package falls inside the tax-free exemption.
• Compare a settlement offer with the minimum you are legally owed.

What the calculator does not cover

Accrued but untaken holiday is ordinary pay and fully taxable but is not modelled here. Nor are contractual bonuses, share awards vesting on exit or benefits continued after the leaving date, all of which are taxed as earnings and can change which band everything else falls into.

Paying part of a large termination payment into a pension can reduce the taxable amount considerably and is worth looking at separately. Payments for injury, disability or death, certain foreign service and restrictive covenants follow their own rules; restrictive covenant payments are taxed in full and do not use the exemption.

The calculator applies the current year’s rates to the whole package. If your notice straddles two tax years, or you have already left and have no other earnings in the year the payment arrives, enter your other taxable pay accordingly rather than your old annual salary. The result is an estimate to help you understand and question an offer; check your contract and settlement agreement and take advice before signing.

This is general information only and not financial advice.

About This Notice Pay Calculator

Use this notice pay calculator to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.