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Redundancy on 8 April

Hi There,

I've been told that I am being made redundant and will be expected to work my notice until 31 March. I will still have 4 months notice left at that point and my employer has said i can work more of my notice period if i wish to do so.

If i leave the company on 8th April 2013 am i right in saying that my PILON payment (+ payment for unused annual leave) will be classed as 13/14 earnings and therefore the new tax free allowance will apply?

Am a little bit nervous about asking for a date so close to the start of the tax year.

Thanks.

Replies

  • getmore4lessgetmore4less Forumite
    46.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
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    Should be in the new tax year, when would the normal pay run be?

    Look at last Aprils pay slip to check it was month 1.

    What is the holiday year, if April-March you(should) lose last years statutory holidays not taken.

    It will depend on exact income and plans for income next year which year is best, if you end up in better job with higher pay you might be better of having the cash in this tax year.


    One catch is it should be taxed as month1 so you will still pay the tax and either have to claim it back ot get it back throughout the years with JSA/earnings.
  • Just to say that PILON is not always taxable.

    For it to be taxable, it must be a contractual payment. So if your contract states that the company reserves the right to make a PILON, it is taxable. It may also be taxable if it is deemed to be incorporated into you contract - for example if it is customary for the company to do this.

    But if it is not in your contract, and the company don't have a history of redundancies - ie this is a 'one off situation', then your PILON may be paid as a lump sum free of tax.

    See here for more info

    http://www.hmrc.gov.uk/manuals/eimanual/EIM12975.htm
    I'm a retired employment solicitor. Hopefully some of my comments might be useful, but they are only my opinion and not intended as legal advice.
  • the last pay run for my companies tax year covers the dates 9 Mar - 5 Apr Which then hits my account on the 12th April.

    I guess that as i would have my leaving date as 8 April, My payment would be in the period 1 of 13/14 which runs from 6 April- 3 May and therefore it will hit my account on 10 May. (note i get paid 4 weekly = 13 times a year)

    Holiday year is Jan to dec, so i will get any unused leave added to that payment.

    I am emigrating so my UK income next year will amount to this payment so far better to have it taxed at a lower rate. Although as you say it will initially be taxed at a much higher rate and i will have to claim it back at the end of the 13/14 tax year.

    PILON is contractual so sadly it is taxable for me. Doh.

    Thanks for your help.
  • getmore4lessgetmore4less Forumite
    46.3K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Forumite
    Do a P50......
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