Voluntary Redundancy and Pilon

tododo

Hi all

The missus is on the verge of taking a redundancy offer in work. headline figure is 41K of which I understand 30K is tax free

However whats thrown us is this PILON

I dont quite get it

We were thinking she could finish in three days - so this FY - which the company dont mind at all by the sounds of it - they just want people out by the looks of it

We then thought we maybe able to split payment over this year and the next financial year to avoid tax if possible - seems sensible to me anyway

However they are now mentioning PILON - and paying tax and Ni --- help anyone
Complete stress out right now and we dont know whats the best thing to do at all

thanks all

xylophone

https://brodies.com/blog/employment/how-should-payments-in-lieu-of-notice-be-taxed-from-april-2018/

https://www.litrg.org.uk/tax-guides/employment/what-tax-do-i-pay-redundancy-payments

Sibbers123

A PILON is taxable as employment income. It is contractual payment and doesn't benefit from the favorable treatment like a genuine redundancy payment does.

You can't split the PILON over two tax years, it will be taxable on a given date (the date they become entitled to such payment).