Working your notice tax question

oilburner_2

and from april 6th 2010 it drops to £20,000

amanda40

Does it really??

dickydonkin

LittleVoice wrote: »

That's the wrong way round.

You work and get paid for the work - taxed.

You don't work but get paid any way (pay in lieu of notice) - not taxed (provided it is not in your contract of employment that this is an option for the employer to operate and it has not been the customary practice)

Correct - and don't forget if you have perks of the job such as a car, phone etc. those 'perks' should still be available throughout the notice period to people who have been paid PILON.

Pete111

Little voice is correct you would be taxed & the others may not be - though HMRC is very hot on untaxed PILON payments these days and most companies have a PILON clause so they get taxed on this element

On the down side you have to work your notice but on the upside it can sometimes prove easier to secure another position if you are currently in work rather than unemployed.

Oilburner that's news to me and very interesting if correct - is this confirmed by HMRC and can you post a link please?

P

happywarmgun

I found myself in a similar situation to you (OP). I raised a grievance and won and am now allowed to leave midway through my (six month!) notice period with my remaining time paid in lieu. The thing that swung my grievance for me was that I had been told I would be paid in lieu of notice throughout the consultation period and it was only the day before I was due to leave they changed their minds - this would not be the same for you if they were always clear you must work your notice.

As others have cleared up:

- Up to £30,000 of serverence is tax free (making this moot in your case as you are already there)
- This tax free severance can only include payment in lieu if there is no payment in lieu of notice clause in your contract. If there is such a clause the PILON componenet is subject to tax - (again, as you have 30k redundancy it will be taxed either way in your case).
- Depending on your package it isn't 'quite' working for free (it just feels like it!). I consoled myself during the last three months that I got - three months extra pension contributions, 3 months extra company car, 3 months extra accrual towards my bonus for this year (which will be paid pro-rata in May) and the security of my health insurnace and death in service for another few months. It was also a pretty easy 3 months once I got my head around the circumstances (stuffed up plans aside). It is very difficult to get stressed about the detail of a job when you have mentally left!

I know that is all positive spin, and I know you probably feel very trapped at the moment and 13 weeks sounds an age. But it is survivable! Do look at your companies policy and raise a greivance if you don't think you are treated fairly... if you have a fair case, and they are fair minded, it may end in your favour....