How to make redundancy payment most tax efficient

[pesmith]

I am being made redundant and about to sign a compromise.

I have a contract which states that the company can pay me Payment in Lieu of Notice which is 3 months.

I then have 4 months + statutory which I think I can take tax free. However this comes below the £30k limit.

I just wondered if there is anything that could be done to make more of the redundancy tax free.

e.g.

1. Could I ask to have a new contract for my last three months at a lower salary and/or including a shorter notice period and then I get paid a higher amount ex gratia?

2. Are there any ways that I can get away with the PILON being more tax free?

Many thanks if anyone can help.

PS

[section 44]

1. Could I ask to have a new contract for my last three months at a lower salary and/or including a shorter notice period and then I get paid a higher amount ex gratia?

The payment would be in connection with variation to the terms of the employment and therefore taxable.

2. Are there any ways that I can get away with the PILON being more tax free?

Practically, no.

[Tax Champion]

If your PILON is contractual, it will not be tax free.
Your redundancy payment will be tax free, whether the statutory amount or higher level.