Should I receive P45 now even if an ex gratia payment still owing?

rocket1234

Hello, I was made redundant last month. I negotiated a slightly bigger settlement agreement than standard redundancy. We agreed the ex gratia bit of the settlement would be paid in 2 parts, one the end of October (along with my notice period pay and standard redundancy pay), in my final payslip, and the second ex gratia part will be paid end of November.

Shouldn't I have received my P45 with my final payslip, even though there is one more ex gratia payment owned?  

Brie

I would be expecting the P45 after all money has been paid.  The exception might be if they discovered in 3 months time that you were owed some back pay or pay for holidays or some other adjustment but not things that should normally be done as part of a standard pay run.

MyRealNameToo

rocket1234 said:

Hello, I was made redundant last month. I negotiated a slightly bigger settlement agreement than standard redundancy. We agreed the ex gratia bit of the settlement would be paid in 2 parts, one the end of October (along with my notice period pay and standard redundancy pay), in my final payslip, and the second ex gratia part will be paid end of November.

Shouldn't I have received my P45 with my final payslip, even though there is one more ex gratia payment owned?  

Ex gratia isnt pay so wouldnt go onto a P45 but would question if it is really an ex gratia payment rather than a negotiated settlement or similar. 

Andy_L

Any thing paid after your leaving date shouldn't be on a P45 (because that is what you've been paid up to your date of leaving) ie you should have received a P45 when leaving rather than it being delayed until the 2nd payment was made

Just because something is referred to as an Ex Gratia payment doesn't mean its not liable to tax so if it is taxable that needs to be sorted out separately

ETA: what have they said when you asked them?
Is the split payment an attempt to avoid/evade tax or is it to ease their cashflow? Its possible they are delaying the P45 until after the 2nd payment to make their tax admin easier

sheramber

If you have to pay an employee after they leave (including someone you’re giving a taxable redundancy payment over £30,000):

• use tax code 0T on a ‘week 1’ or ‘month 1’ basis (use the code S0T if they’re taxed at the Scottish rate or C0T if they’re taxed at the Welsh rate)
• deduct National Insurance (unless it’s a redundancy payment) and any student loan repayments as normal - but if it’s an ‘irregular’ payment like accrued holiday pay or an unexpected bonus, treat it as a weekly payment
• report the payment and deductions in your next FPS, using the employee’s original ‘Date of leaving’ and payroll ID, and set the ‘Payment after leaving’ indicator
• give the employee written confirmation of the payment showing the gross amount and deductions
• add the additional payment in the ‘Year to date’ field if the payment is in the same tax year

The payment should be the only one in the ‘Year to date’ field if it’s being paid in the next tax year.

You must not give the employee another P45.

https://www.gov.uk/employee-leaving

chrisbur

Andy_L said:

Any thing paid after your leaving date shouldn't be on a P45 (because that is what you've been paid up to your date of leaving) ie you should have received a P45 when leaving rather than it being delayed until the 2nd payment was made

The last advice from HMRC that I saw was to issue the P45 when the employee leaves or after the last payment is made to them.  When I worked in payroll all the employees were paid one week in arrears, so every employee had a week's wages due to them which would be paid a week after they left.  Issuing the P45 when they left would not be practical.

LITRG

Hello, I enclose a link to our guidance on redundancy payments which hopefully answers your question: https://www.litrg.org.uk/working/employment/leaving-job/redundancy. Thanks