31/07/2026
When you lose your job, the first £30,000 of compensation is tax free.
The thing is, that £30,000 was set in 1988 and hasn’t moved since.
If it had kept up with inflation it would be north of £100,000 today.
Meanwhile the weekly pay figure used to calculate statutory redundancy goes up every April. It has to. The law says so.
It went from £719 to £751 this year.
Which sounds like good news. And for lower earners it is.
But statutory redundancy pay counts towards the £30,000.
So as that cap rises, it eats the tax free allowance quicker.
Particularly for the high earner c-suite client I generally advise with Settlement Agreements.
Max statutory redundancy is now £22,530. That leaves £7,470 of headroom before the taxman starts taking a cut of whatever else your employer offers you. Not much for a high earner.
Another way this government taxes normal working people.
If you need advice on a settlement agreement, get in touch or visit www.settlement-agreement.co.uk