Settlement Agreement Calculator
Estimate settlement package: redundancy, notice, holiday, ex-gratia and tax treatment (£30K tax-free).
Last updated: April 2026 · Source: Acas — Settlement agreements
Estimated Net Settlement
£27,192.31
| Statutory Redundancy (5 weeks) | £3,500.00 |
| Notice Pay (4 weeks) | £3,076.92 |
| Holiday Pay (10 days) | £1,538.46 |
| Ex-gratia (estimated) | £20,000.00 |
| Total Gross | £28,115.38 |
| Tax-free (first £30K) | £23,500.00 |
| Tax on remainder | -£923.08 |
| Net Settlement | £27,192.31 |
First £30,000 of termination payments are tax-free. Notice pay, holiday pay and bonus are always taxable. Ex-gratia amount is a starting point — negotiate higher. Always get independent legal advice (employer must contribute ~£500 for this).
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
A settlement agreement (formerly compromise agreement) is a legally binding contract where an employee waives the right to bring tribunal claims in exchange for a financial package. Typical components include notice pay, redundancy pay, an ex-gratia payment (often tax-free up to £30,000), holiday pay and a contribution toward legal fees.
The value of a settlement depends on your bargaining position. If you have strong tribunal claims (e.g. unfair dismissal or discrimination), the employer has more incentive to offer a generous package. A starting point for negotiation is often the basic award plus 3–6 months' salary, but this varies enormously.
This calculator estimates a typical settlement range based on your salary, length of service, notice period and the strength of any potential claims. The first £30,000 of an ex-gratia payment is usually tax-free under section 401 of ITEPA 2003.
Example: 5 years' service, £40,000 salary, 3 months' notice
- Statutory redundancy: 5 weeks × £769 = £3,845
- Notice pay (3 months): £10,000 (taxable)
- Ex-gratia payment: £10,000–£20,000 (first £30,000 tax-free)
- Accrued holiday: £1,500
- Legal fees contribution: £350–£500 + VAT
- Total package estimate: £25,695–£35,845
Source: Acas — Settlement agreements
Frequently Asked Questions
- What does the Settlement Agreement Calculator do?
- Estimate settlement package: redundancy, notice, holiday, ex-gratia and tax treatment (£30K tax-free). All calculations are performed in your browser using official UK rates and thresholds.
- Is this calculator based on 2025/26 rates?
- Yes. This calculator uses the current 2025/26 UK tax year rates for income tax, National Insurance and other deductions, effective from 6 April 2025.
- Does this include pension contributions?
- This calculator can factor in workplace pension contributions. Under auto-enrolment, the minimum is 8% total (5% employee + 3% employer) of qualifying earnings.