Tax confusion

I have just been made redundant, the letter I was given at the end of March said that my last day at work would be the 6th April and I would be paid my redundancy, PILON and holiday pay on the 7th.
So far I have not been paid and when I asked why, I was told there is some confusion over the best way to do it to minimise the tax I pay on the PILON.
My contract states I have to give and vice versa 3 months notice. I am also due 1 weeks holiday.
So as far as I can see I should Get £6466.50 for the statutory redundancy, this is not in question as it is tax free. As I was earning £25,000 do I not get 3 months wages less deductions that I normally pay i.e. 3 x £2,083.33 less £402.36 x3 or is it £6,249.99 less an amount more than 3x£402.36

Thanks for any help you can give.
Garth

Replies

  • p00hsticksp00hsticks Forumite
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    juppy52 wrote: »
    I have just been made redundant, the letter I was given at the end of March said that my last day at work would be the 6th April and I would be paid my redundancy, PILON and holiday pay on the 7th.
    So far I have not been paid and when I asked why, I was told there is some confusion over the best way to do it to minimise the tax I pay on the PILON.
    My contract states I have to give and vice versa 3 months notice. I am also due 1 weeks holiday.
    So as far as I can see I should Get £6466.50 for the statutory redundancy, this is not in question as it is tax free. As I was earning £25,000 do I not get 3 months wages less deductions that I normally pay i.e. 3 x £2,083.33 less £402.36 x3 or is it £6,249.99 less an amount more than 3x£402.36

    Thanks for any help you can give.
    Garth

    I guess that their concern is that if they put all three months wages through in one go using your usual tax code, then their payroll system will take it that you are earning over £6000 a month and deduct a fair amount of tax at the 40% rate. You would get it back eventually (either when you take new employment or after the end of the next tax year) but I imagine that you'd much prefer not to have the extra deduction in the first place ...
  • Filo25Filo25 Forumite
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    Forumite
    juppy52 wrote: »
    I have just been made redundant, the letter I was given at the end of March said that my last day at work would be the 6th April and I would be paid my redundancy, PILON and holiday pay on the 7th.
    So far I have not been paid and when I asked why, I was told there is some confusion over the best way to do it to minimise the tax I pay on the PILON.
    My contract states I have to give and vice versa 3 months notice. I am also due 1 weeks holiday.
    So as far as I can see I should Get £6466.50 for the statutory redundancy, this is not in question as it is tax free. As I was earning £25,000 do I not get 3 months wages less deductions that I normally pay i.e. 3 x £2,083.33 less £402.36 x3 or is it £6,249.99 less an amount more than 3x£402.36

    Thanks for any help you can give.
    Garth

    Maybe they are looking at a way of structuring the deal so that the PILON is treated an actual redundancy payment so that you would receive it tax free?
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