Payment in Lieu of Notice Deductions

mfactor

Quick question , I have just been dismissed (capability) but will be given a payment for 12 weeks in Lieu of notice ( £6000 before stoppages) , but had read somewhere that the tax office will assume it is my new weekly wage and tax me higher...

I rang the Tax office and the guy told me that yes I would probably be taxed "some" at a higher tax rate, but will get it back at some point...

Trying to find a calculator to work out how much they will take but have had no joy...

So does anyone have any idea ????

getmore4less

The standard HMRC PAYE calculator will do it based on the last pay statement and the new payment.

links on this page for TAX and NI

https://www.gov.uk/government/collections/how-to-manually-check-your-payroll-calculations

purdyoaten

mfactor wrote: »

Quick question , I have just been dismissed (capability) but will be given a payment for 12 weeks in Lieu of notice ( £6000 before stoppages) , but had read somewhere that the tax office will assume it is my new weekly wage and tax me higher...

I rang the Tax office and the guy told me that yes I would probably be taxed "some" at a higher tax rate, but will get it back at some point...

Trying to find a calculator to work out how much they will take but have had no joy...

So does anyone have any idea ????

Is the payment contractual? If not it could well be that it is not taxable. Check your contract for any mention of payment in lieu of notice provisions. If there is no mention of it your question could be irrelevant.

http://www.hmrc.gov.uk/manuals/eimanual/EIM12976.htm

chrisbur

mfactor wrote: »

Quick question , I have just been dismissed (capability) but will be given a payment for 12 weeks in Lieu of notice ( £6000 before stoppages) , but had read somewhere that the tax office will assume it is my new weekly wage and tax me higher...

This is a very common misconception about PAYE. You probably have read this it appears on this site quite often; but it is not how PAYE works.

PAYE makes no assumptions and the tax office is not involved.

Assuming you have the normal 1060L cumulative tax code then each week you are paid you can earn £815 (round figures) before 40% tax is due. Any of this you do not use gets carried forward to the next week and so on. So by week 10 you can earn £8150 before 40% tax is due.
Find the week number that your last payment is being made on and multiply it by £815. If your total taxable pay to date including your PILON is higher than this then some tax will be due at 40% if lower then no 40% tax.
If any tax is paid at 40% and your future earnings fall below the £815 a week figure then some probably all will eventually be rebated to you.

Regarding the taxable position of PILON make sure you check the link given it is not just a case on has to be in the contract it can be shown in other things eg staff handbook or indeed just be the common practise for your employer. The link has a link about this towards the end.

green_man

If you do pay excess tax and you are not then working you may be able to claim it back before the end of the tax year using the P50 form.

I am trying to do this at the moment as well, however the HMRC web site seems to be broken and I cannot access this form at present. ***

Anyone had any luck with a P50 form Recently?


EDIT - *** Now seems to be fixed again, however having gone through this process it does not seem to be asking for the correct information from me. It asks for my P45, but this does not show my redundancy payments, so they would be unable to give me the correct refund. Anyone been successful with one of these?