Settlement

What is your settlement offer really worth?

The headline is not the take-home. This works out the notice element, how much of the offer sits inside the tax-free band, and roughly what reaches your account.

An estimate, not advice. Confirm your figures with a qualified tax adviser before you rely on them.

Gross basic salary Salary only. Leave out overtime, bonus, commission and benefits, because the notice calculation uses basic pay.

Are you in a salary sacrifice arrangement? Pension, car, cycle to work or similar, where you give up salary in exchange for a benefit. The notice calculation must use your pay before the sacrifice, so this changes the answer.

How often you are paid If you are not paid monthly, the statutory method counts actual days, so treat the result as a closer estimate rather than an exact figure.

The headline offer The total figure your employer has put on the table.

Contractual notice period, in months

How much of that notice will you actually work? In months. Enter 0 if you are leaving immediately.

Does your contract let the employer pay in lieu of notice? A PILON clause. If you are not sure, check your contract before you rely on the result.

Your income tax rate on this money The rate your next pound of income is taxed at. For most people receiving a five-figure settlement this is 40%.

Statutory redundancy included in the offer Only in a genuine redundancy. Leave at 0 if this is not a redundancy.

Fill in your salary, the offer and your notice period, and the estimate appears here.

Estimated amount reaching your account

£0

If less than this lands in your account, the figure above is not necessarily wrong. Employers commonly apply an emergency 0T tax code to money paid after your P45 is issued, which deducts more at source than you finally owe. You claim the difference back through self assessment or a repayment claim. Check the tax actually deducted against what you expected, and do not assume the first number you see is the final one.

See the full breakdown. Which part is notice pay, how much sits inside the £30,000 band, what is taxed and at what rate, and the levers that move value without costing your employer more.

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This is an estimate produced from the figures you entered, not a calculation of your position and not tax advice. The notice calculation has edge cases that move the number: irregular pay, a salary change during the reference period, a leap year, salary sacrifice, and pay periods that are not whole months. The result assumes your whole offer is either notice pay, statutory redundancy or genuine ex-gratia compensation, and that none of it is unpaid salary, holiday, bonus or commission, all of which are taxed in full as earnings on top. It also assumes National Insurance on the notice element at 2%, which is the rate above the upper earnings limit and is where a lump sum of this size normally lands, so a smaller payment to a lower earner may attract more National Insurance than shown. It applies the single tax rate you chose to every taxable part of the offer, which a real settlement often does not do: a large payment can push you through a tax band, and once your total income passes £100,000 your personal allowance tapers away, both of which can move the answer by thousands. If your offer is large enough to cross a band, treat this as a rough shape rather than a figure. Have your figures confirmed by a qualified tax adviser before you rely on them or sign anything.

Then counter it properly

The Settlement Counter Offer Kit shows you the four numbers behind any offer, the levers that move value without costing your employer a penny more, and the exact letters to counter with. £67, instant download.

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