PILON and Redundancy

Hootie19

Does anyone know if income paid gross under PILON in the case of redundancy has any "come backs".

Would a tax code be adjusted when the employee begins a new job, so that the amount of tax paid is adjusted to ensure that all income over the person's personal allowance is taxed.

Is PILON just a way of deferring the tax?

http://www.direct.gov.uk/en/Employment/Employees/RedundancyAndLeavingYourJob/DG_10026689 - scroll down the page quite a way. It's under "If your employer doesn't give you proper notice".

Debt_Free_Chick

Hootie19 wrote: »

Does anyone know if income paid gross under PILON in the case of redundancy has any "come backs".

Would a tax code be adjusted when the employee begins a new job, so that the amount of tax paid is adjusted to ensure that all income over the person's personal allowance is taxed.

Is PILON just a way of deferring the tax?

http://www.direct.gov.uk/en/Employment/Employees/RedundancyAndLeavingYourJob/DG_10026689 - scroll down the page quite a way. It's under "If your employer doesn't give you proper notice".

It might be easier if you set out your actual situation.

But .... if your contract includes a PILON payment, then it will be paid to you in the same way as your normal pay, with tax and NIC deducted.

If there is nothing in your contract, then the payment you get is compensation (damages) and it's not classed as "pay". The first £30k is paid tax-free; any amount over that is taxable.

Hootie19

Thank you D-F-C

The company I worked for has made three people (out of 30) redundant. I was the first to be told (although no finger had been pointed, it was obvious from the first meeting held that I was in the firing line, so to speak). I mentioned to my friend that they'd made me redundant, and that I left the office on the day I was given the letter saying I'd been made redundant.

I was told that I'd be paid up till the end of February.

I mentioned it to my friend, and she told me about PILON, and suggested I mentioned it to the employer. I did so, and the manager emailed back and said "confirm that we will pay you gross, so you will be responsible for the tax if applicable at a later date".

I'm not sure now if that means that the tax WILL be payable at a later date or that it MIGHT be payable at a later date.

The two other people who were made redundant were also told they would be paid under PILON.

There was nothing in our contracts about PILON (the first I'd ever heard of it was when my friend mentioned it to me). I had not been with the company for 2 years so wasn't entitled to any redundancy pay at all.

I am to be paid for the month of February, plus 2 weeks pay as a goodwill gesture, plus 5.5 days accured holiday pay. That comes nowhere near £30k. I wish!!! lol

LittleVoice

Hootie19 wrote: »

.

IThere was nothing in our contracts about PILON (the first I'd ever heard of it was when my friend mentioned it to me). I

It is because your contract did not refer to pay in lieu of notice but only what notice had to be given that they are able to pay it as damages for their having broken the contract. If the contract mentioned that PILON will be paid then it would have been a contractual matter and therefore taxable.

Hootie19

Thank you LittleVoice. So *when* I get another job, the unpaid tax on the PILON won't be taken by a tax coding adjustment. Excellent. Thank you again.

LittleVoice

BTW, iI believe that f you haven't got a job yet and need to register as unemployed, then the DWP will take your PILON into account when they work out when you become eligible for JSA. That is, if the pay equates to the amount you would be due to receive up to the end of February, then DWP will say you can't receive JSA for a period earlier than the end of February.

Hootie19

Yes, I suspected that it would impact on any JSA I might be eligible for. I wasn't going to register as unemployed until the end of February anyway, as that is when I am getting paid until. Don't know if that's the right thing or not (fortunately, I am a complete novice at this unemployment lark!)

NAF_3

LittleVoice wrote: »

BTW, iI believe that f you haven't got a job yet and need to register as unemployed, then the DWP will take your PILON into account when they work out when you become eligible for JSA. That is, if the pay equates to the amount you would be due to receive up to the end of February, then DWP will say you can't receive JSA for a period earlier than the end of February.

That was true up until last year.

Any Holiday Pay or PILON is now treated as capital instead of Income. meaning that if it comes in below £6000 there is no effect on benefit. When in doubt it is always best to make a claim to JSA and ask the questions at the interview as a delay in booking/making your claim means you are likely to miss out on money. While applying for backdating is a possibility it is unlikely to succeed.

Hootie19

NAF wrote: »

it is always best to make a claim to JSA and ask the questions at the interview as a delay in booking/making your claim means you are likely to miss out on money. While applying for backdating is a possibility it is unlikely to succeed.

Eeeek - should I apply now?? I was waiting until my month was up (I'm being paid up to the end of Feb). Is that not the right thing to do?

NAF_3

Hootie19 wrote: »

Eeeek - should I apply now?? I was waiting until my month was up (I'm being paid up to the end of Feb). Is that not the right thing to do?

Make your appointment (If you need one) ASAP. If you arent entitled for whatever reason let them tell you that rather than waiting and then finding out it is too late.

I live and work in Northern Ireland, we mirror the benefit system in GB, I am assuming therefore that the guidence changed at the same time over there. Either way make an appointment and find out.

I will find our guidance tomorrow and try to firm this advice up a little (If Possible).