Can I save tax like this when made redundant?

milto81

Can you wave your notice period and take the sum tax free in your redundancy package?

I have been selected for redundancy and was wondering if I can agree with my company a 2 stage process to try and minimize tax.
1. Agree to terminate my contract and waive the notice period in my contract.
2. Agree to a redundancy package which is the stat min + 1 months gross salary(the notice period)

This would save me the tax payment and the company their employers NI. The only downside I can see is slightly less accrued holiday pay through the notice period, 1 less NI payment and 1 less pension contribution.

Is this legal and acceptable? I am only likely to get statutory minimum and am trying to maximise my payout as I don't know how long it will have to last.

Thanks

McKneff

In a normal world would you be getting PILON or would you be required to work your noitce.

The reason I ask is that as far as I am aware when it comes to PILON, if this is not in your original contract then it has to be classed as compensation and not PILON so tax/ni wouldnt be payable.

Im quite happy for someone to come along and explain it better than me.

milto81

Thank you for your response normally the company would expect an employee to work their notice period or be put on garden leave (As I understand technically the same as working your notice, just you get to be at home).

However I believe they have in the past agreed to let staff leave early where they agreed not to be paid for that time, maybe this was unpaid leave ??

My hope was to do something similar and use this to negotiate a higher tax free redundancy package. I understand these would be 2 separate things and may be dodging tax but is it illegal?

McKneff

I really dont know but to be honest it sounds a bit suss....lol

milto81

Thanks for your feed back.

That was my feeling too, but if you don't ask you don't get. My consultancy meetings tomorrow maybe someone can confirm legality before that.

McKneff

and I do hope you find a job soon.

Annie