Edge-over-competition improvement

Settlement Agreement Tax Checker

Page purpose

This page is for users who need to separate package elements before relying on a headline settlement figure.

This version goes further than a basic threshold checker by breaking the package into plain-English groups and then routing users to the page most likely to help next.

Reviewed against official guidance
Built around GOV.UK tax guidance and Acas settlement guidance
Package-shape output
Shows whether the package looks earnings-heavy or termination-payment heavy
Next-step routing
Sends users to the most relevant next page, not just a generic explainer
What this page covers

Statutory redundancy pay, enhanced severance or compensation-style amounts, PILON, holiday pay, and unpaid wages or bonus.

What this page does not cover

Personal tax advice, payroll calculations, PENP detail calculations, or every clause in a settlement agreement.

Tax treatment is only one layer:

Strong settlement competitors often separate “what is taxable?” from “is this offer good enough?” This page is strongest when used as a tax-category guide before checking fairness, clauses, and independent advice.

Why this page was improved:

Strong settlement competitors help users understand the package at a glance. This version now pushes harder on plain-English category reading and practical checks before relying on the figure.

Reviewed against official guidance

Last reviewed: 28 March 2026. This page is designed as a practical first-check page built around official GOV.UK and Acas guidance where applicable.

If your package mainly contains PILON, holiday pay, and wages

Your question is often closer to final pay and taxable earnings than to a pure “tax-free settlement” question.

If your package mainly contains statutory redundancy and extra compensation

Your question is often about how much sits within the £30,000 termination-payment threshold and what sits above it.

If you are not sure which label fits

Use the comparison page below this tool. That is faster than guessing your way through multiple pages.

Reviewed status

Last reviewed: 28 March 2026

Current build status: Batch 8 edge-over-competition improvement

Purpose: help users understand the shape of a package before specialist advice.

Core rule points used

  • The first combined £30,000 of certain qualifying termination-payment elements may be tax free.
  • PILON is generally taxable.
  • Holiday pay and unpaid wages are generally taxable as earnings.
  • A settlement agreement must meet legal conditions to be valid, including independent advice.
Why this page was improved:

Strong settlement competitors often combine tax breakdowns with “is this a good offer?” style context. This version now leans further into what should be verified before relying on the package figure.

If you mainly want the statutory redundancy figure

Go to the redundancy calculator instead of using this page as a general redundancy tool.

Open redundancy calculator

If you mainly want final-pay components

Use the final-pay help page to understand notice pay, holiday owed, and wages first.

Open final pay page

If you are not sure which issue you have

Use the comparison page to quickly identify whether your issue is redundancy, settlement structure, or final pay.

Open comparison page

Check next:

If the real question is fairness, minimum entitlements, or clause risk, do not stop at the tax figure. Use the settlement help page and route onward from there.

Open settlement next-step page

Official sources used

Source and review block

GOV.UK: What you pay tax and National Insurance on

Used for the point that the first combined £30,000 of qualifying termination-payment elements may be tax free, but PILON and similar earnings are taxed differently.

Open official source

GOV.UK: Tax and National Insurance on redundancy payments

Used for the simpler framing that statutory redundancy pay under £30,000 is not taxable and that holiday pay and unpaid wages are treated differently.

Open official source

Acas: using settlement agreements

Used for the legal validity conditions, including the requirement for advice from a relevant independent adviser.

Open official source