Facing redundancy? We’re here to support you
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Last updated: 12 October 2026
Redundancy financial support starts with a clear plan. If you are facing redundancy, check what you are owed, understand how it is taxed, work out how long your money needs to last, and talk to a financial coach before making big decisions. Lifetime’s coaches can help you take stock and plan your next steps with confidence.
Redundancy can be one of life’s most unsettling experiences, emotionally and financially. At Lifetime, our mission is simple: to help people feel more in control of their money, especially in difficult times.
Why is redundancy on the rise?
Many UK employers are still planning job cuts. The CIPD’s Labour Market Outlook for spring 2026 found that 22% of employers expected to make redundancies in the next three months, rising to 26% in the public sector.
The same survey found that cost management is by far the key priority for organisations, which continues to put pressure on businesses and, in turn, on the people who work for them.
What redundancy pay are you entitled to?
If you are an employee and have worked for your employer for 2 years or more, you will normally be entitled to statutory redundancy pay. According to gov.uk, the amount depends on your age and length of service:
- half a week’s pay for each full year you were under 22
- one week’s pay for each full year you were 22 or older, but under 41
- one and a half week’s pay for each full year you were 41 or older
Length of service is capped at 20 years. For redundancies from 6 April 2026, weekly pay is capped at £751, so the most statutory redundancy pay you can receive is £22,530. Your employer may pay more than this under your contract.
You are also entitled to a minimum notice period: at least one week if you have been employed between one month and 2 years, one week for each year between 2 and 12 years, and 12 weeks if you have been employed for 12 years or more. Your rights can also include time off to look for a new job.
Gov.uk has a free statutory redundancy pay calculator that helps you check what you are owed.
Is redundancy pay taxed?
Usually, the first £30,000 is tax free. HMRC guidance on gov.uk says you do not usually pay tax on the first combined £30,000 of statutory redundancy pay, additional severance or enhanced redundancy payments and non-cash benefits.
You will still pay tax and National Insurance on:
- unpaid wages
- holiday pay
- bonuses
- any payments you receive instead of working your notice period
If you think the tax on your final payslip is wrong, contact HMRC before you spend the money.
How do you create a redundancy finance plan?
A redundancy finance plan shows how long your money will last and what to do with it first. These five steps give you a clear starting point.
- Know your total payout. Add up redundancy pay, notice pay, holiday pay and anything else you are owed, and note what is taxable.
- Build a survival budget. List essential monthly bills, then divide your payout and savings by that figure to see how many months you are covered.
- Protect priority bills first. Keep up with housing, council tax and energy before anything else. If you have a mortgage, speak to your lender early if you think you may struggle. Your home may be repossessed if you do not keep up repayments on your mortgage.
- Check your cover and benefits. Review any insurance you have, such as income protection or payment protection, and check whether you can claim benefits while you look for work. See our page on protection.
- Pause before big decisions. Paying off debt, topping up a pension or investing a lump sum can make sense, but take guidance first.
What happens to your pension if you are made redundant?
Your workplace pension savings remain yours. You can usually leave them where they are or transfer them to another scheme.
Transferring a pension, or taking money from it early, is an important decision: you can lose valuable benefits, and tax can apply to withdrawals. The value of pensions and investments can go down as well as up, and you may get back less than you put in. Our pensions team can talk you through your options, and MoneyHelper offers free, impartial pension guidance.
What does redundancy counselling from a financial service include?
Redundancy counselling from a financial service helps you understand your money, not just your job options. At Lifetime, that support comes through our financial coaches.
A coach can help you go through your payout, your budget and your options, and point you to regulated advice where you need it. Your first chat is free, with no obligation: book a chat with a Lifetime coach.
How does redundancy affect your wellbeing?
Redundancy isn’t just a financial challenge. It can affect your confidence, your mental health and your sense of security.
That’s why our support focuses on your financial wellbeing, giving you the clarity and reassurance you need to move forward, whether that’s finding a new role, pursuing a career change, planning for retirement, or simply taking a breath.
Lifetime’s Marketing Director, Keerti Baker, explains:
“We know that redundancy is more than just a financial shock: it can shake your confidence and sense of security.”
How can employers support staff through redundancy?
Offering financial coaching as part of a redundancy package helps people leave with a plan, not just a payslip. It shows care for departing staff and reassures the colleagues who stay.
Employers can point affected employees to Lifetime’s financial coaches: staff can book a chat with a Lifetime coach, and we also offer a range of free materials that employers can include in redundancy documentation or share with affected employees. To request these, email us at [email protected] or call 0333 920 5888.
Find out how an employee financial wellbeing programme can support your whole workforce through periods of change.
Frequently asked questions
How much statutory redundancy pay will I get?
It depends on your age, length of service and weekly pay. From 6 April 2026, weekly pay is capped at £751 and service at 20 years, so the maximum is £22,530. You normally need 2 years’ service to qualify. The gov.uk calculator gives a quick estimate.
Do I pay tax on my redundancy pay?
You do not usually pay tax on the first combined £30,000 of redundancy and severance payments. Unpaid wages, holiday pay, bonuses and pay in place of working your notice are taxed as normal.
What should I do with my redundancy money first?
Work out how long it needs to last. Cover priority bills such as housing, council tax and energy, keep an emergency buffer, and only then consider paying off debts, saving or investing. A financial coach can help you weigh these choices.
Should I put my redundancy pay into my pension?
It can be tax efficient for some people, but it depends on your income and how soon you might need the money. Pension values can go down as well as up. Speak to a regulated adviser or MoneyHelper first.
Where can I get free help if I am facing redundancy?
MoneyHelper, backed by government, offers free and impartial guidance on redundancy pay, budgeting, benefits and pensions. Lifetime’s financial coaches can also help you build a redundancy finance plan.
Talk to a Lifetime coach
If you are facing redundancy, it’s easy to get started. Contact us via our website, email us at [email protected], or call 0333 920 5888.
For free, impartial money guidance, you can also visit MoneyHelper.
Your home may be repossessed if you do not keep up repayments on your mortgage. The value of pensions and investments can go down as well as up.
