PILON taxable?

paddyandstumpy

Apologies for what I'm sure is a common question, but is PILON taxable?

My employer is making our team redundant from 31/1/17 and we are getting 2 weeks per year of service redundancy (I understand this is tax free but please can someone confirm?) and PILON for our notice periods.

This will all come in one payment in the February paycheque.

Andy_L

It depends. If PILON is contractual then it is taxable. If its not contractual but the employer has decided to offer it to make their life easier then it is tax free

tacpot12

Redundancy payments of £30,000 or less are tax free. Anyone lucky enough to be being paid over £30,000 will have the element that is over £30,000 taxed as income.

lisyloo

My pilon was not contractual but was taxed. I argued with HMRC but their senior staff said it was "salary in advance", so I think you will have to go with whatever your employer does.
If your employer has if tax free the great, if they don't then you'll have a very hard job persuading HMRC. I sent them case law but they didn't agree with me. I didn't bother fighting HMRC in court.

paddyandstumpy

Hi all, thanks for the replies. I'll be getting less than £30k redundancy so it should be tax free, I assume my employer will sort this and just pay me gross?

The PILON I understand will probably be taxed.

Now I just need to find a new job, at least xmas is ages away and everywhere in my industry is looking for new staff...

Oh wait!

Tim1000

Hi, if you have PILON written into your contract it will be taxed unfortunately. The only element of your redundancy that will tax free is your statutory redundancy pay not your PILON.

getmore4less

Even if non taxable the employer can keep the tax an NI.

For many it is easier to let you argue with HMRC.

There are options to increase the employee in the pocket money where the employer has room to give extra notice.(eg redundancy where the termination is in the future).

BargainJunky

Years ago I resigned from my job and as I was moving to the competition I was asked to leave immediately - they paid me in lieu of notice and it was tax free.

Years later I was made redundant from the competition and I was given the opportunity to either work my notice or leave immediately. As you can guess I went immediately and once again they paid me in lieu of notice and it was tax free.

My best friend works in payroll and she said both companies did it wrong it should have been taxed.

lisyloo

For many it is easier to let you argue with HMRC.

I think for many it's about liability and taking the route of least resistance.
If they are not 100% sure then why would they take the risk.
I did at least understand why my employer would take that view.

no1catman

Please be aware that the PILON amount can vary depending on length of service.
My previous employer offered me four weeks PILON, I said that I believed it should be more like twelve! After a sharp intake of breath, he asked why I would think that, so I produced a print-out from the DWP website.
It caused, it seemed quite a bit of embarrassment (national company), but as well as myself, two others also got the extra money.

getmore4less

Notice is contractual or 1 week per year up to 12 which ever is the greater.

PILON is a payment for any of that time that is left when terminated.