PILON & Notice Pay Tax Calculator
Payment in lieu of notice (PILON) is taxed as earnings: Income Tax at 20%, 40% or 45% plus employee National Insurance at 8% or 2%. The £30,000 termination exemption never covers it, because HMRC's post-employment notice pay (PENP) rules pull the notice element back into taxable pay.
Read more
Many employees are surprised that notice pay is fully taxable. Unlike statutory redundancy pay which has a £30,000 tax-free allowance, PILON is treated as regular earnings subject to income tax and NI in full. Our redundancy tax calculator shows how the two are taxed side by side.
Understanding your notice pay entitlement helps you plan financially when changing jobs or facing redundancy. Enter your employment details below to calculate your take-home amount.
Notice Period Details
Your salary before any deductions
Total notice period in your contract
How many weeks you'll actually work
Paid immediately instead of working notice
Weekly Pay
£0
Based on annual salary ÷ 52
Notice Pay Breakdown
Payment Type
Gross Notice Pay
£0
4 weeks × £0/week
Income Tax
£0
National Insurance
£0
Total Deductions
£0
Net Notice Pay
£0
Amount you'll receive after tax and NI
Key Points
- • Notice pay is always fully taxable
- • Both worked notice and PILON attract Income Tax and NI
- • This is separate from your £30k redundancy tax-free allowance
- • 2026/27 tax rates and NI thresholds applied
Understanding Notice Pay in the UK
Figures below use 2026/27 rates (Personal Allowance £12,570, basic rate to £50,270, higher rate to £125,140; employee NI 8% / 2%). When you leave a job—whether you resign, are made redundant, or are dismissed—you're usually entitled to a notice period. This calculator helps you understand how much you'll receive and what deductions to expect.
Worked Notice vs PILON
Worked Notice
- • You continue working during your notice period
- • Paid as normal salary through payroll
- • Income Tax and NI deducted as usual
- • Pension contributions continue
- • Benefits (car, healthcare) typically continue
- • Service continues for holiday accrual
Payment in Lieu of Notice (PILON)
- • You leave immediately
- • Paid as lump sum in final pay
- • Income Tax and NI still deducted
- • Pension contributions usually stop
- • Benefits end immediately
- • Employment ends on leaving date
Why Notice Pay is Always Taxable
Unlike redundancy pay, notice pay represents payment for work you would have done. HMRC treats it as earnings whether you:
- Actually work your notice period (normal payroll)
- Receive PILON instead (taxed as earnings)
- Are put on "garden leave" (still employed, normal payroll)
Important: There is no tax-free element to notice pay. The £30,000 redundancy exemption does not apply to notice payments. The only exception is non-contractual PILON, which may be treated differently—check with your employer.
Statutory vs Contractual Notice
Statutory Minimum Notice
By law, once you have at least one month's service you must get 1 week's notice. After 2 years' service it rises to 1 week per complete year, capped at 12 weeks (so 12 years' service or more gives 12 weeks).
Contractual Notice
Your contract may specify a longer notice period (e.g., 1 month, 3 months). If your contractual notice is longer than statutory, your contract applies.
Example: If you've worked for 5 years and your contract says 1 month's notice, you're entitled to 5 weeks (statutory) not 4 weeks (contractual), because statutory is higher.
Frequently Asked Questions
Related Calculators
Sources & methodology
PILON is calculated from your basic pay for the unworked notice period, then taxed using 2026/27 Income Tax bands and employee National Insurance (8% between £242 and £967 a week, 2% above). Post-employment notice pay (PENP) is treated as earnings, so it sits outside the £30,000 termination payment exemption.
What's Next?
Not sure which calculators you need?
Answer 7 quick questions and we'll show you exactly which UK costs apply to your situation. Takes under 60 seconds.