Payment in Lieu - Tax question

london2008

I just recently had to take redundancy and have today received three months payment in lieu of notice. This money had been paid in my March pay and it has pushed me over the 40% tax bracket resulting in me paying way more tax then I thought I would.

As I'm unlikely to be working in the next several months, do you know if I can reclaim my tax on this as in theory the payment in lieu relates to April to June.

Thanks in advance for any advice!

ultrarunner

it would depend on when your official leave date was, if it was in March then I don't think you will be successful. the PILON may have pushed your total earnings for the year above the 40% bracket of £37,400

Bean_Counter

The payment will be treated for income tax purposes in relation to the date it was paid, so it will count as income for the current tax year. The fact that it may relate to April to June does not matter for tax purposes.

You may want to investigate quickly paying an increased pension contribution if you want to mitigate being in the higher tax band.