Advice required regarding Voluntary Severance

pickarandomusername

This may be a tricky one, but here goes....

I work at a UK HE institution in two separate contracted roles, one full-time and one part-time. The part time post, which is as a welfare support worker in a Hall of Residence, is potentially being discontinued and my employer has asked for expressions of interest in a Voluntary Severance scheme for that post. I have met with my employer to discuss the package (potentially) on offer, and am indeed interested on taking them up on it. The figures they have shown me include a taxable PILON payment and a Voluntary Severance payment. The VS package would be contingent upon me signing a compromise agreement, as there is a potential of a convoluted case being made against the HE institution regarding non-payment of NMW, which I assume they would wish to see the VS being considered settlement of.

However, I have today heard from my employer that they have taken the view that the VS payment would be liable for tax (which I would have to pay at the higher rate) and NIC, presumably due to the fact that I will remain employed with the same institution via my other full-time role. I have had a look around the web and have not found any similar cases to judge whether this is correct or not. The HMRC website doesn't help much either as the examples quoted (quite reasonably) relate to situations where the employees only post within an organisation is being terminated.

Does anyone have a view on whether my employer would be correct in their assertion regarding the tax liability of any VS payment made to me in these circumstances? Any advice/comments would be really helpful.

Thanks in advance.

getmore4less

Interesting,

I found this example(different) but it does hint that compensation for changes of duties and payment may be considered part of the tax free element.
http://www.thefreelibrary.com/Tax+Treatment+Of+Payments+To+Reduce+Contractual+Redundancy+Rights.-a0220087836

Note that it also states that only one £30k can be used per employment so it would probably impact any future payments.

Needs further research a call to the tax office may be in order they can be helpfull.

have you looked here
http://www.hmrc.gov.uk/MANUALS/eimanual/EIM12800.htm