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Redundancy sacrifice and PILON
I am currently in the process of being made redundant from my job and would like some clarity on a question that my employer is finding difficult to answer.
The company have agreed that we can salary sacrifice our redundancy pay and they will also pass on the NI employer savings but they have declined the request to salary sacrifice our payment in lieu of notice (PILON) with no real explanation.
My quick research suggests it can be done so I am asking on what grounds could they refuse.
Any clarification would be appreciated and I could ask the company to take another look at this matter.
Comments
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They don't need any reason to refuse, it's entirely at their discretion.
However Post Employment Notice Pay where sacrified amounts can be excluded from the tax due on termination payments does complicate matters for the employer and employee
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The reason is the PENP sum gets worked out on your pay before any sacrifice, so putting the PILON into the pension doesn't take the tax off it. They'd still have to run PAYE on that slice, so there's nothing in it for either side.
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As others have said above, PILON can't be sacrificed.
I was made redundant last year. I put over a year's salary into my pension, but had to pay tax on the PILON, which is annoying because I've always kept myself under 40% by paying into my pension (and other sacrificial things like shares and car).
I've since claimed it back, but it would have been annoying if I'd gone to another PAYE job.0
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