Most of what you will find online about redundancy pay answers a different question. It tells you what you are owed. Acas, MoneyHelper and GOV.UK are good at that, and there is a calculator for it on every second website. Very few tell you how long the money buys you, which is what most people actually want to know on the day the letter arrives.
I can say that with some feeling, because I have been on the receiving end. My last job was at EY, the global professional services and consulting firm, in London, and I loved working there. I volunteered for redundancy because my work-life balance had got out of hand and I needed out. It was a reluctant decision and a frightening one. I knew the headline rules perfectly well, including that the first £30,000 is usually tax-free. The figures were never the difficult part.
What the headline number leaves out
Statutory redundancy pay is a formula. It depends on your age, your length of service and your weekly pay, and the weekly pay used in the formula is capped, at £751 in Great Britain from April 2026. For many people the statutory figure comes out smaller than they expected, and the cap means it barely moves however much you earn.
Your actual package may include more than that. Enhanced redundancy terms, pay instead of working your notice, holiday pay and a bonus can all be in there, and they are not all taxed the same way. GOV.UK says the first £30,000 of statutory redundancy pay, extra severance and non-cash benefits is usually tax-free, with tax applying above that. Pay you receive instead of working your notice, unpaid wages, holiday pay and bonuses are taxable and attract National Insurance.
So the figure in the letter and the figure that reaches your bank account can sit some way apart. Only the second one is any use for working out how long you can last.
Runway is a different sum
The arithmetic is not complicated. Take the amount that actually arrives after tax. Divide it by what you spend each month. If money is still coming in from somewhere else, such as a partner's income, benefits or a new job that starts later, only the shortfall comes out of the pot.
Here is an illustration. Say £18,000 reaches your account and your outgoings are £2,400 a month.
Same payout, double the runway. These numbers are made up for the sake of the example and are not a projection for you or anyone else.
The months cost more than the spreadsheet says
People tend to budget for a normal month, and the first months after a redundancy are rarely normal. Annual bills turn up when they feel like it, including car insurance, a service and anything else you had been putting off. Claims and payments can take weeks to start. Looking for work costs money in its own right. And anything your employer used to provide, from pension contributions to health cover, either stops or becomes your bill.
None of that is dramatic. It simply means a runway worked out from a tidy monthly figure usually comes out longer than the real one.
What I did not see coming
My own case was an unusual one, because the money was not there to bridge me to another salary. I had taken on a great deal of personal risk. For a while I held down the London job while building the new business in every hour I could find outside it, knowing the redundancy was coming and that I would have to start drawing money from something that was not finished. Those first months were hard, and to be honest, terrifying.
If I had known at the time what the following ten years would bring, I would not have done it. On reflection, though, I learned more in those ten years than I could ever have learned from any amount of consultancy, however big the project or the client. Raising capital and refinancing. The legal and accounting requirements of running a business, which you either learn and comply with or you do not survive. Positioning a business for sale, which I did entirely on my own. A long-running COVID class action, where I sat on the committee. You do not get that kind of education in consulting, because in consulting you are not the one with everything at risk.
I had everything at risk, and for ten years I was boxed in, defending one position after another from a weak starting point. It changed me, and not entirely for the better. I doubt the business would have survived without the fighter that it made of me, and I came out the other end with a resilience I did not have going in, and able to start the next stage of my life.
What changes the answer
A few things move the number more than people expect:
- Whether you work your notice or are paid instead of working it, because the two are taxed differently.
- When the money lands. Timing across tax years can change what you keep.
- How long it takes for income to start again, which is usually longer than the first guess.
- Whether you are counting on pension money. Access to a pension is governed by its own rules, so it should not be assumed to be available.
If this kind of thing is useful, I write about transitions like this every fortnight in The Poreia Perspective, which is free.
This article is educational and does not constitute regulated financial advice. The figures and thresholds quoted reflect the position at the time of writing, October 2026, and are subject to change, including at the Budget on 28 October. The worked example is a general illustration, not a personalised projection. Always consult a qualified financial adviser or tax professional before making significant financial decisions.