tax on pay in lieu of notice

gg2731

I have been given early retirement on ill health grounds, by the city council education dept. My last pay was this week and was made up of back pay owing, 3 days holiday pay, and 12 weeks pay in lieu of notice. I was taxed on this and wonder if anyone can advise if this should have been non-taxable?
thanks
gg

purch

Well the back pay and holiday pay should be taxable, and I think the lieu of notice pay is too.

We are close to the end of the year, so it should be treated like normal pay

dunstonh

All that pay is taxable.

cyclonebri1

gg2731 wrote: »

I have been given early retirement on ill health grounds, by the city council education dept. My last pay was this week and was made up of back pay owing, 3 days holiday pay, and 12 weeks pay in lieu of notice. I was taxed on this and wonder if anyone can advise if this should have been non-taxable?
thanks
gg

Excuse me for the thread hijack but I am in a similar position and am at present expecting my early retirement on health grounds.

Is it a general rule that payment in lieu of notice is given under these circumstances? or a specific benefit of the individual employer?

I ask as I am on a 6 months notice period having been of ill for 9 months.
I didn't actually expect anything, I bet someones about to tell me I won't be dissapointed:rotfl: :rotfl:

Liz_the_Whizz

With my HR hat on, pay in lieu of notice is only taxable if it is a specific term in your contract of employment.

AFAIK, if nothing is specified, it can be paid gross.

sexyjessie599

Hi I just retired on ill health as well but my pay was taxed as normal then my pay in leiu was added, effectively being tax free.
Jess

CarolynH

It's all taxable, I think it's only redundancy pay that can be paid tax free (up to 30k).

merlinthehappypig

cyclonebri1 wrote: »

Excuse me for the thread hijack but I am in a similar position and am at present expecting my early retirement on health grounds.

Is it a general rule that payment in lieu of notice is given under these circumstances? or a specific benefit of the individual employer?

I ask as I am on a 6 months notice period having been of ill for 9 months.
I didn't actually expect anything, I bet someones about to tell me I won't be dissapointed:rotfl: :rotfl:

It depends.

I had to take retirement on ill-health grounds from a local authority job.

I had been off work just under a year before they decided I had to take retirement and so on half pay. When the decision was made the council had to give me three months notice back on full pay before the retirement came into effect. I didn't get this in lieu of notice, just got three months more full pay before the retirement date.

cyclonebri1

Hi, thanks for that. Although it's another local council employer. By the time mine gets sorted out I will have run out 6 months full pay and 6 months 1/2 pay. I don't want to ask the question of my private employer yet as I am still in negotiation over entitlement etc.

cyclonebri1

I'll give it a bump back up in case anyone knows as I am in to see my employer this morning.

merlinthehappypig

If you are retiring under the local authority pension scheme there are strict rules about what your employer can and can't do. If you are on a contract that gives you six months notice then I am sure that they will have to give you this notice, on full pay, before your retirement kicks in.

Nothing you say to your employer will alter your entitlement - it's all laid down under the scheme.