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Beware of the redundancy tax trap!
Comments
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If your contractural PILON was 13 weeks - but your employer doubled it to 26 weeks because you were being made redundant, would 13 weeks be taxable and 13 weeks not? Assuming your redundancy was over the tax free threshold.
Can anyone help on that one?:beer:No Longer addicted to Boots! - Well not today anyway!! :blushing:
Officially Mortgage free 31/07/2017 , 12 years early :j0 -
Depends when your termination date is. If they are giving you 13 weeks PILON up to your termination date then 13 weeks extra, the extra 13 weeks are an exgratia payment and are not taxable. If they move your termination date back to 26 weeks then its all taxable. I would check your paperwork.0
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Thanks for this OP. Am I right in saying I should be ok if my employer stated that it was compensation for loss of earnings in the letter (they wrote this in my redundancy letter and pay in lieu of notice was also paid out tax free) I was a higher rate taxpayer and am still unemployed, now claiming JSA.:smileyhea0
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[QUOTE=amyface;27645657]Almost spat my tea out.[/QUOTE]
And why would you do that then?
My response that caused your regurgitation was to the OP making incorrect statements about me - a person who he does not know and is not familiar with my personal financial circumstances.
How would you feel if I made incorrect accusations or statements about YOU on a public forum? Now THAT would be enough to make you spit out your tea!
As I have stated - and for the last time, I am sure the ambiguous post implies a valid point, what I found irritating was the accompanying puerile, irrellevant uneccessary drivel, that many people who are going through redundancy would have found unacceptable.
Some (including the gloating OP) would think it amusing - many wouldn't!0 -
Ive just been through redundancy but I didnt find it irritating at all, actually found the sarcastic bits quite amusing. Reckon its good to have a sense of humour about these things or life would become very dull and depressing. Also think its quite obvious that these comments were made in a tongue-in-cheek manner.:smileyhea0
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I'm with Big Al on this.
We have a VR scenario where I work, and I've applied (long service and want to do something else with my life).
The original VR calculator just told us that, the PILON payment would be taxed at normal rate and then the severance payment would be taxed at whatever over £30k. Fine, understand that.
Craftily, they have included now for us the following statement:
"If you are a higher rate tax payer, OR if the severance payment takes you over your tax threshold then it is your responsibility to pay any higher rate tax on this amount"
So...anything I get at all, is going to send me in to the 40% tax bracket
The tax man will unfortunately be asking me for money by April 5, as the leaving date is Feb - again craftily close to the end of the tax year. Although the amount they 'say' they will tax looks quite negligible (under 2k) I bet I'll STILL have to put money away just in case Mr HMRC comes a knocking at the door.
I've no plans to return to work straight away anyhow, so I'll be putting a P50 in and then not going to sign on (even for NI contributions) till the new tax year.
Good job I intend to be a tax-dodger for a couple of years after (planning to go to University) and with any luck, they'll end up owing it me back
Best shelve any big plans to spend any money just yet!
What I want to make clear is...the PILON payment, if paid in ordinary salary will probably end up being taxed at 40% too, as that amount of money is going to send me over the threshold again. (I'm earning a smidge under £40k p.a at the moment, but 4 months salary in one go is certainly going to be more than that for the tax year)
Anyone know?0 -
Depends when your termination date is. If they are giving you 13 weeks PILON up to your termination date then 13 weeks extra, the extra 13 weeks are an exgratia payment and are not taxable. If they move your termination date back to 26 weeks then its all taxable. I would check your paperwork.
Finishing date Friday 11/12/09 Pilon ( is for following 3 months)on letter confirming redundancy states 13 weeks but calculation is based on 26 weeks pay - Another seperate letter came out from HR stating that as it was a redundancy package, they were doubling it! They are receiving this on top of Redudancy payout, so just want to insure they only tax what is necessary as there will be an element of 40% deducted from it ( holiday pay is due also) What proof would we need for the tax office from HR?
Thanks in advance for any help given:TNo Longer addicted to Boots! - Well not today anyway!! :blushing:
Officially Mortgage free 31/07/2017 , 12 years early :j0 -
Finishing date Friday 11/12/09 Pilon ( is for following 3 months)on letter confirming redundancy states 13 weeks but calculation is based on 26 weeks pay - Another seperate letter came out from HR stating that as it was a redundancy package, they were doubling it! They are receiving this on top of Redudancy payout, so just want to insure they only tax what is necessary as there will be an element of 40% deducted from it ( holiday pay is due also) What proof would we need for the tax office from HR?
Thanks in advance for any help given:T0 -
I am just trying to work out my OH's tax return as he was made redundant in December 2008, was a 40% tax payer, received 3 months PILON and an enhanced payment.
This thread is making my head swim at the moment (didn't get all the way through the first post!) but I will read it in more detail later, calculator in hand.
As usual MSE comes up with very timely advice - thank you all.0
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