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Redundancy Sacrifice Calculator

Redundancy sacrifice can provide a tax saving to the member for the employer to make a pension contribution on their behalf, should the employer pass on any of their National Insurance saving, this will increase the pension contribution at no extra cost.

Key features

  • See the effect on the tax liability of the member, plus full calculations
  • Assess the benefits of any employer saving passed on for the pension contribution.
  • See the effective "return" based on an assumed rate of taxation when the pension is taken by the member

Model a redundancy sacrifice scenario

The main advantage of redundancy sacrifice, is a tax saving to the member to make a pension contribution, should the employer pass on any of their National Insurance saving this will increase the pension contribution at no extra cost. Enter details of salary, personal (relief at source), the gross redundancy amount, the amount of any taxable redundancy to be sacrificed and any employer National Insurance to be passed on to calculate the pension contribution that will be made.

You can also calculate the effective "return" based on an assumed rate of taxation when the pension is taken by the member. This is calculated based on the reduction to take home pay against what can be taken assuming no growth, 25% taken as a pension commencement lump sum with the remainder based on the assumed rate of pension income taxation.

Guidance, but not advice

The results of the tool shouldn’t be considered as advice and is to aid you during your advice process. The results are based on our current understanding of legislation and HMRC practice. But these might change without notice and the tool doesn’t take into account all of the possible circumstances that could impact your clients.

Whilst you're able to download this tool, we would always recommend using the version available online in case it changes.

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Please note - you need to enable macros to use the tool.

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M&G Wealth is a trademarked brand of the M&G plc group which encompasses M&G Wealth Advice Limited, M&G Wealth Investments LLP and Investment Funds Direct Limited. The legal entities under the M&G Wealth brand also work alongside The Prudential Assurance Company Limited, Prudential International Assurance plc and Prudential Distribution Limited in relation to the provision of certain products and services. To understand more about our businesses and brands, you can view the corporate and regulatory information for the aforementioned legal entities.