If I were to paid in lieu of three months notice at the end of this month will the notice amount be deemed to be gross salary for the 2010-11 tax year or do HMRC recognise that it is being paid in advance?
Thanks.
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Its being paid now. It gets taxed now.
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Thanks, that's what I thought.
Hmm ...
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Yes, I believe it will be taxed.
Only redundancy payment up £30k (not sure about the exact amount) is tax free.
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Theres the answer, get them to make your redundant.
Thoughts.
Now if I understand it, a new firm is taking over your old firm. Have you considered how Tupe affects your rights here?
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>> Theres the answer, get them to make your redundant.
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They will be it seems though that is not the point, it is the payment in lieu of notice, three months salary, I might ask if they can pay me in April rather than March.
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>> Now if I understand it, a new firm is taking over your old firm. Have you considered how Tupe affects your rights here?
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Yup and it doesnt apply for convoluted reasons that are difficult to explain in 60 mins of Powerpoint yet alone here.
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>> Yes, I believe it will be taxed.
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>> Only redundancy payment up £30k (not sure about the exact amount) is tax free.
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Provided your rights to redundancy pay are not defined in your employment contract, if they are it will be taxed, or so I was told at the end of 2009 .when I was made redundant.
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Blimey, I wouldn't start work for anyone who puts redundancy terms in my CoE!
(unless they are exceptional terms of course!)
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>> Blimey, I wouldn't start work for anyone who puts redundancy terms in my CoE!
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>> (unless they are exceptional terms of course!)
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Neither would I, but I though it was worth pointing out that the 30K tax free threshold is not a 100% certainty. I think companies have to be a bit careful about the wording of redundancy/compromise agreements as well.
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>> Blimey, I wouldn't start work for anyone who puts redundancy terms in my CoE!
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>> (unless they are exceptional terms of course!)
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When I worked for Pearson many moons ago they did exactly that. I think it was a month's pay for every year you'd done over two, plus six months, plus statutory, or some such.
As it was my first "proper" job I thought that was normal, and was surprised when I found subsequent employers who didn't mention it at all.
Last edited by: Crankcase on Thu 3 Mar 11 at 09:44
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I sign that one, that's not redundancy terms, that's a perk.
I bet the union negotiated that one, cheaper to keep them on that make them redundant.
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I agree with Zero. If I could get that, I'd be actively looking to get made redundant. :-)
With some fag packet calculations, assuming £30k tax free, and not burning £300 a month in fuel commuting, I reckon I could take two years off without curbing my spending over current levels. Or six months off, move on, and have a nice fat chunk in the bank for a rainy day.
Sadly, based on the redundancies at our place when two companies merged a couple of years ago, I'd get statutory. Not a penny more. :-(
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2 yr minimum service before redundancy payments legally required to be made.
Maybe the OP has not done 2 years hence 90 days in lieu of notice.
What did the OPs contract of employment have in it re-jotice etc?
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Yes no statutory redundancy due though they are not being too unfair, the question is around the paid notice i.e. in lieu of working in April, May and June 2011 being taxed as 2010-11 income.
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Go to taxationweb.co.uk and ask the question.
As I understand it, and it's not my area and it's very complicated, PILON is likely to be taxable. 30k worth of redundancy should not. So if you can get them to make you redundant then you are more likely to get it tax free.
Your payments will be taxable (if taxable) on the date they are received, so if you can delay them past 5 April then you will (potentially) save on tax.
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>> As I understand it, and it's not my area and it's very complicated, PILON is
>> likely to be taxable.
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That was certainly what happened in my case, it was in my contract of employment so it was taxable. The NI situation was complicated as well, for reasons I can't recall at the moment.
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Get paid 1 month in March and get 2 mths on 6th April.
Previous employer "in pay freeze days" 30 years ago paid us on last day of month - brought forward pay day to 6th of the month - effectively an 8% payrise - except when you leave you are 1 month short!
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I will be paid as normal in March so I might ask that they pay me the 3 months PILON after 6th April.
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You could well accept your notice today, so work one month of notice and receive an extra month's pay as part of your 30k.
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>> You could well accept your notice today, so work one month of notice and receive
>> an extra month's pay as part of your 30k.
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he is not getting £30k, AFIC see.
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Didn't say he is.
He is paid £100 per month.
His employment is terminated on 31 March at which point he gets £300 PILON - plus his March salary of £100. Total £400, less tax at 20%, cash = £320.
He is given 1 month's notice on 1 March, and will be paid £100 of redundancy. On 31 March he is therefore entitled to March salary of £100, PILON £200, Total £300 less tax at 20%; cash = £240. PLUS redundancy money of £100. Total cash therefore £340 if he takes the £100 redundancy as a part of his annual entitlement to £30k tax free redundancy money.
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Thanks all, notice will start 1st April, not negotiable, last pay 25th March will include March salary, bonus and owed holiday. PILON could possibly be paid in April though, I will ask.
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Paid in lieu of notice - tax question - Zero
