Redundancy Pay

Hi,

I'm looking for some advice on redundancy pay.
I was previously on £26k a year and I was given 3 months redundancy in lieu. I just received the payment now (payday).
The letter stated I would get £6500, this includes 13 days holiday pay that I did not have the chance to use whilst employed.
I am told that redundancy pay in the UK is tax free if it's below £30,000, yet I only netted £5,944.68.
Is this the correct sum, for 3 months redundancy pay + 13 days holiday pay?
I read that Companies can easily make mistakes with tax and that I should get a second opinion if something seems a little strange.
Thanks in advance =)

Comments

  • Redundancy is tax free up to £30k . Correct
    Payment in lieu (of notice), known as PILON, is not tax free as it is considered as salary.
  • 50Twuncle
    50Twuncle Posts: 10,763
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    gdrforest wrote: »
    Redundancy is tax free up to £30k . Correct
    Payment in lieu (of notice), known as PILON, is not tax free as it is considered as salary.


    Not necessarily - if the employee is made redundant under a non-contractual agreement - PILON will be tax free (up to (combined with redundancy payment) £30k)
  • nicechap
    nicechap Posts: 2,852
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    There's something up with the sums.

    3 months of £26k annually = £6,500 which should be tax free if redundancy.

    13 days annual leave would be about £1,000 on top but you'd pay tax on that.

    Have they clawed back any costs such as training?
    Originally Posted by shortcrust
    "Contact the Ministry of Fairness....If sufficient evidence of unfairness is discovered you’ll get an apology, a permanent contract with backdated benefits, a ‘Let’s Make it Fair!’ tshirt and mug, and those guilty of unfairness will be sent on a Fairness Awareness course."
  • marlot
    marlot Posts: 4,925
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    50Twuncle wrote: »
    Not necessarily - if the employee is made redundant under a non-contractual agreement - PILON will be tax free (up to (combined with redundancy payment) £30k)
    I believe that is no longer the case.


    https://brodies.com/blog/employment/how-should-payments-in-lieu-of-notice-be-taxed-from-april-2018/
  • 50Twuncle
    50Twuncle Posts: 10,763
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    edited 2 November 2018 at 2:06PM
    You are correct
    I was going by old rules
    So the OP who was on £26k would normally expect to take home £1755 per month
    and with 13 days leave - thats another £1k
    making a total of £6200 - so I reckon that the OP has been hard done by and should investigate !
  • Masomnia
    Masomnia Posts: 19,506
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    Holiday pay and PILON are both taxable.

    If you have less than two years service then in the absence of a contractual right to more that is all you are due sadly.
    “I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse
  • Annisele
    Annisele Posts: 4,827
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    I wondering if OP didn't actually get 3 months of redundancy pay at all.
    If OP got 3 months pay total - with 13 days of that made up of holiday pay, and the remaining two and a half months as redundancy - then the figures look more reasonable. But I agree; something looks weird here and OP should check.
  • McKneff
    McKneff Posts: 38,816
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    Op. Do you have a letter outlining your payments.
    make the most of it, we are only here for the weekend.
    and we will never, ever return.
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