Agenda for Change Section 16 & HMRC s.403 Tax Exemption

NHS Redundancy & MARS Severance Calculator (2026/27)

Calculate your exact NHS Section 16 Contractual Redundancy (1 month per year of service up to 24 years, £80k salary cap) or Mutually Agreed Resignation Scheme (MARS) payout, including the £30,000 HMRC tax-free allowance and marginal PAYE tax on any excess above £30,000.

Direct Answer · NHS Section 16 Redundancy Formula (2026/27):Under Agenda for Change Section 16, eligible staff with 2+ years of continuous NHS service receive 1 month's pay for each complete year of reckonable service (up to 24 years / 24 months' pay, capped at an £80,000 annual salary / £160,000 maximum payout). The first £30,000 is 100% tax-free and NI-free; amounts above £30,000 pay marginal Income Tax only (0% Employee National Insurance).

1. Configure NHS Service & Severance Scheme

Official NHS Agenda for Change Section 16 & HMRC £30,000 Tax-Free Termination Rules

8 Years (8 Months' Pay)
2 Yrs (Min Qualifying)8 Yrs15 Yrs24 Yrs (Max Cap)
Net Redundancy Payout (After Tax)First £30k Tax-Free
£26,639

Gross entitlement: £26,639 (8 months' reckonable pay @ £3,330/mo).

100% Tax-Free Slice
£26,639
ITEPA 2003 s.403 exemption
Net Salary Runway
11 Months
Of normal net take-home pay

Section 16 vs. MARS & Tax Breakdown

Section 16 Redundancy Gross (8 mos)£26,639
MARS Voluntary Severance Gross£13,320
Tax-Free Exemption (First £30,000)£26,639 (£0 Tax)
Taxable Excess Above £30,000£0
PAYE Tax on Excess (0% NI / 0% Pension)-£0
Net Cash Payout Kept£26,639
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2026/27 NHS Section 16 Gross Redundancy Payout Matrix by Band & Service

Contractual redundancy lump sums (1 month per complete year of service, subject to the £80,000 reckonable salary cap on Bands 8b–9). Amounts up to £30,000 are paid 100% tax-free.

NHS Band (Entry)Reckonable Salary5 Years (5 Mos)10 Years (10 Mos)15 Years (15 Mos)24 Years Max (24 Mos)
Band 2 (Healthcare Assistant)£25,272£10,530£21,060£31,590£50,544
Band 3 (Senior Healthcare Assistant)£25,760£10,733£21,467£32,200£51,520
Band 4 (Nursing Associate)£28,392£11,830£23,660£35,490£56,784
Band 5 (Staff Nurse (RN))£32,073£13,364£26,728£40,091£64,146
Band 6 (Junior Sister / Charge Nurse)£39,959£16,650£33,299£49,949£79,918
Band 7 (Ward Manager / Sister)£49,387£20,578£41,156£61,734£98,774
Band 8a (Matron)£57,528£23,970£47,940£71,910£115,056
Band 8b (Senior Matron)£66,582£27,743£55,485£83,228£133,164
Band 8c (Head of Nursing)£79,504£33,127£66,253£99,380£159,008
Band 8d (Deputy Director of Nursing)£80,000(Cap)£33,333£66,667£100,000£160,000
Band 9 (Director of Nursing)£80,000(Cap)£33,333£66,667£100,000£160,000

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Statutory Notice: NetPayScale UK provides independent computational models synchronised with the 2026/27 NHS Terms and Conditions of Service (Agenda for Change) Handbook and HMRC PAYE regulations.