Incorrect Taxation of Redundancy Damages

greenflamingo_2

Can someone help with this please?

I was made redundant whilst on maternity leave and my employer breached my contract by failing to give me contractual notice. On the wage slip I received they have paid me a sum stated as "PILON". Out of this they have deducted nearly £2K in income tax. As I understand it damages are payable for breach of contract and these are not subject to income tax. There is no clause in my contract for payment of PILON and it only states that I am entitled to 13 weeks notice for termination of employment.

Obviously the £2K is quite a lot of money to pay in income tax when it shouldnt have been taken. Can you advise how I go about getting a refund as my employer has told me that as I am receiving SMP from them for another 29 weeks I cannot have my P45 until it finishes so cant claim back the income tax?

maninthestreet

PILON = Pay in lieu of Notice, so it's taxable.

McKneff

Dont understand your term contractual notice. surely the 13 weeks is the notice which is in your contract, i dont see a breach so dont see where the 'damages'
comes in. You have been paid 13 weeks pay in Lieu of Notice, this payment was not damages, it was pay.

How long have you been with the company.
Did you receive redundancy pay

sammyjammy

I think they mean contractual notice of the redundancy, if this is true then you are correct the payment is for damages not PILON and you are also correct that these damages are not taxable, I would imagine your best bet is a union if you have one or the tax office may be able to advise you, good luck.

Sam

McKneff

i agree about speaking to the union but the op said that PILON was printed on her wage slip

greenflamingo_2

Thanks guys. Annie just because the company has printed "PILON" on my salary slip does not mean that it is correct. The HR manager said that he thought I could reclaim the tax after speaking to the tax office so I guess I now need to write down everything in a letter and hope for the best.