UK · 2026
UK PILON Calculator
Work out your gross and net UK payment in lieu of notice. Enter your weekly or monthly pay and the unworked portion of your notice. All PILON is fully taxable as earnings under the post-April 2018 PENP rules; the calculator applies PAYE and employee NI to give you the net figure. For the full calculation formula see how is PILON calculated and for the tax treatment see PILON tax.
PILON calculator
Gross PILON
£9,000
13.00 weeks of unworked notice at £692 per week.
| Line | Amount |
|---|---|
| Gross PILON | £9,000 |
| Estimated income tax (20%) | -£1,800 |
| Estimated employee NI (8%) | -£720 |
| Estimated net PILON | £6,480 |
Tax: Since April 2018, PILON is treated as earnings and is fully taxable through PAYE plus National Insurance. The £30,000 tax-free allowance does not apply to PILON.
Net figures are illustrative — they use a flat marginal rate for the tax band selected and do not model the personal-allowance taper, pensions, student loans or Scottish rates. For a full final payslip including salary during notice and holiday payout, use the final pay estimator. For the whole exit view, use the leaving-a-job planner. Whether your employer is contractually allowed to pay PILON depends on a clause in your contract; otherwise it has to be agreed.
Last updated Last reviewed
How PILON works
PILON (payment in lieu of notice) is a lump sum your employer pays you instead of working out your notice. Your employment ends on the day PILON is paid, not at the end of the contractual notice period. That has real consequences for things like restrictive covenants, which start counting from your employment end date.
The basic formula
Gross PILON equals your normal pay for the unworked notice. For someone on a 3-month notice period who is paid PILON for all 3 months at £3,000 per month gross, that’s £9,000 gross. Monthly figures convert to weekly at 52 weeks divided by 12 months, which is about 4.33 weeks per month.
Worked example
Sarah is on £3,500 gross per month with a 3-month notice period. Her employer wants her off payroll immediately and pays full PILON. Gross PILON = £3,500 × 3 = £10,500. After PAYE and NI, the net figure is significantly lower because the £30,000 termination tax-free allowance does not apply to PILON. The lump sum is taxed in the month it lands, which often pushes Sarah into a higher tax band for that month only.
What counts as “normal pay”
Basic salary always counts. Contractual bonuses usually count. Discretionary bonuses usually don’t. Benefits in kind (car, medical, pension contributions) sometimes count if the contract requires their inclusion. The default rule is your basic salary plus anything the contract specifically says is part of the PILON calculation.
Tax: the 2018 reforms
Before April 2018, contractual PILON was taxable but non-contractual PILON could sometimes fall within the £30,000 termination payment exemption. HMRC closed that gap. All PILON, contractual or not, is now classed as Post- Employment Notice Pay (PENP) and taxed as earnings. The tax-free £30,000 only applies to genuine ex-gratia termination payments and statutory redundancy.
PILON vs working notice vs garden leave
See the full PILON guide for a side-by-side comparison. The short version: PILON pays you off in cash and ends employment immediately; working notice keeps you in role until the notice period ends; garden leave keeps you employed but at home with full pay through the notice period. The post-termination clock for non-competes starts at different points in each case, which can be the most important factor if you’re moving to a competitor.
PILON tax calculator: applying PAYE and NI
This PILON tax calculator applies the same PAYE and employee National Insurance rules that your employer’s payroll runs. Since April 2018, all PILON is fully chargeable as earnings under section 402D ITEPA 2003 and does not benefit from the £30,000 threshold in section 403. To split a full settlement package into taxable and tax-free elements, use the settlement agreement tax calculator. To verify the underlying Post-Employment Notice Pay figure against HMRC’s formula, use the PENP calculator.
PILON payment calculator: gross and net figures
As a PILON payment calculator, this tool returns both the gross lump sum (basic pay × unworked notice) and the net amount after PAYE and NI deductions. Employer NI (currently 15 per cent for 2025-26) is separately payable by the employer and does not reduce your net figure. Where the employer routes any portion of the PILON payment into your pension as an employer contribution, that portion bypasses both income tax and both employee and employer NI - see PILON pension contributions for the mechanics.
PILON calculator (HMRC compliant)
The calculator applies the HMRC-compliant PENP formula from section 402D ITEPA 2003 and Employment Income Manual EIM13880: ((BP × D) ÷ P) − T. That’s the same formula your employer’s payroll uses to determine the general-earnings tax charge on your termination payment. Cross-check the payroll figure against the standalone PENP calculator before signing a settlement agreement. HMRC source references appear in the Related guides section below.
Related guides
- PILON: full explainer
- PILON tax — how the post-2018 PENP rules tax PILON in full.
- PILON and holiday pay
- PILON and bonus payments
- PILON examples — five worked UK scenarios with gross-tax-net.
- PILON vs garden leave
- Garden leave explained
- The complete UK resignation guide
- Notice period rights UK
- Final pay after redundancy — when PILON is part of a redundancy package.
Related calculators
- Leaving-a-job planner for the whole exit (notice, PILON, holiday, final payslip, timeline) in one view.
- Notice period calculator — final working day when working notice rather than taking PILON.
- Garden leave calculator
- Redundancy pay calculator
- Holiday entitlement calculator — accrued holiday paid alongside PILON.
- Settlement agreement calculator
Employment law resources
For the official HMRC PENP rules, see gov.uk on tax on PILON.
Frequently asked questions
- What is PILON?
- Payment in lieu of notice is a lump sum your employer pays you instead of requiring you to work through your notice period. Employment ends immediately on the date PILON is paid, rather than at the end of the notice period.
- How is PILON calculated?
- Gross PILON is your normal pay for the unworked portion of your notice period — typically your basic salary, plus any contractual benefits the contract requires to be included. Bonuses and discretionary elements are usually excluded unless your contract or scheme rules say otherwise.
- Is PILON taxable?
- Yes. Since April 2018, all PILON is treated as earnings under HMRC's Post-Employment Notice Pay (PENP) rules and is fully taxable through PAYE plus National Insurance. The £30,000 tax-free allowance for termination payments does not apply to PILON.
- Can my employer choose PILON without my agreement?
- Only if your contract contains an explicit PILON clause. Without one, paying PILON without agreement is technically a breach of contract — though most employees accept it because it gets them off payroll quickly with full payment.
- Does PILON include accrued holiday?
- PILON itself does not. Untaken accrued holiday must be paid out separately. It's also taxable as earnings, but it sits on a different line from PILON.
General information, not legal or tax advice. For your specific situation, contact ACAS or an employment-law solicitor.