Redundancy Pay Taxed Incorrectly - Where to Escalate?

calcotti

stratty said:

Without more detail it's difficult to draw a conclusion but note that in some cases your ex Gratia is contractual it can be taxable.

Surely if it’s contractual it is not, by definition, ex gratia? (Just asking, not an area I know much about).

Jeremy535897

calcotti said:

stratty said:

Without more detail it's difficult to draw a conclusion but note that in some cases your ex Gratia is contractual it can be taxable.

Surely if it’s contractual it is not, by definition, ex gratia? (Just asking, not an area I know much about).

Indeed. Employers have been caught out by providing for contractual termination payments, but by definition an ex gratia payment is a payment that is outside the contract of employment. PILONs are now taxable.

unholyangel

Jeremy535897 said:

catsatonthemat said:

@Jeremy Apologies for not being clear, I thought I had been. Thank you for the link, that's really helpful. What a pain to get it back, especially at this time, and with such a long wait. 

@Thrugelmir The office is closed because of the pandemic, so there are no phones, just email. 

No problem. The link is a bit of a last resort, as it really addresses under deductions of tax, rather than your situation, and obviously there is no "bad faith" from HMRC's point of view. So I'd start by telephoning HMRC.

OP should check his tax account online first. 

If the employer has actually reported the larger figure as taxable, it will require the employer correcting it. If they've reported the right info to hmrc then hmrc can deal with it.

stratty

calcotti said:

stratty said:

Without more detail it's difficult to draw a conclusion but note that in some cases your ex Gratia is contractual it can be taxable.

Surely if it’s contractual it is not, by definition, ex gratia? (Just asking, not an area I know much about).

Exactly.  If it's included as a clause in contract but dressed up as ex Gratia it is caught as taxable.  Just making the OP aware of this point.

daveyjp

Ex gratia is a payment outside of the contract of employment and includes redundancy payment over and above the statutory amount.

They are tax free up to £30,000.  The agreement should set this out.

catsatonthemat

Thanks all. Yes my settlement agreement stated 1 month PILON, 2 month's ex gratia. They paid me the equivalent of 2 month's PILON and 1 month's ex gratia. The ex-gratia amount I should have received is definitely under the threshold for non-taxable redundancy allowance. 

For clarity, the business is running, people are working remotely. They are simply just not responding.