By Team SalaryCalculate · 1/7/2026

Financial Planning After Redundancy: Securing Your Future

Facing redundancy can be a daunting experience. However, with the right financial planning, it's possible to navigate this difficult time and secure your future. Understanding your redundancy rights, calculating your redundancy payment, and effectively managing your finances are key to moving forward.

Know Your Redundancy Rights

Firstly, it's crucial to understand your redundancy rights. In the UK, you're entitled to redundancy pay if you've been with your employer for at least two years. The amount you'll receive depends on your age, weekly pay, and years of service, with a maximum weekly pay cap of £719 (as of April 2025). The maximum total payment is £21,570 (£719 × 20 years × 1.5). These limits are reviewed annually every April.

Calculate Your Redundancy Payment

Using a [redundancy severance calculator](/tools/uk/england/redundancy-severance-calculator), you can get an estimate of your statutory redundancy pay. This can help you plan your finances post-redundancy.

Here's a quick rundown of how the payment is calculated:

Half a week's pay for each full year of service when you were under 22

A full week's pay for each full year of service when you were between 22 and 41

One and a half week's pay for each full year of service when you were 41 and older

Remember, the weekly pay is capped at £719 and the length of service is capped at 20 years.

Managing Your Finances Post-Redundancy

Once you know the amount you'll receive, it's time to plan how to use it. Here are some suggestions:

**Create a Budget** - Use a [redundancy budget planner](/tools/uk/england/redundancy-budget-planner) to manage your expenses. This will help you stretch your redundancy pay until you find another job.

**Pay Off Debts** - If you have any debts, consider using part of your redundancy pay to clear them. This will reduce your monthly outgoings and make your budgeting easier.

**Invest in Pension** - Consider contributing to your pension. Use a [redundancy pension calculator](/tools/uk/england/redundancy-pension-calculator) to understand the long-term benefits of this.

**Save and Invest** - If you already have a buffer in place, consider saving or investing part of your redundancy pay to generate income for the future.

FAQs About Redundancy

Below are some commonly asked questions about redundancy:

**Q1: Can I negotiate my redundancy pay?**

Yes, you can negotiate your redundancy pay but your employer isn’t legally obliged to offer more than the statutory amount.

**Q2: What happens to my pension when I'm made redundant?**

Your employer will stop contributing to your pension when you're made redundant. However, you can continue making contributions to your pension pot.

**Q3: Are redundancy payments taxed?**

Only redundancy payments over £30,000 are taxed. The first £30,000 is tax-free.

Facing redundancy can feel overwhelming, but with careful planning and sound financial decisions, you can secure your future. Use the resources available to you and remember, there's always help available if you need it.

Resources

Here are some resources you may find useful:

Gov.uk: Calculate your Redundancy Pay

Citizens Advice: Redundancy: your rights

ACAS: Understanding Redundancy

Remember, this is a challenging time, but with the right knowledge and tools, you can turn it into an opportunity for financial growth and stability.