PILON tax


Postby neill on Tue Feb 27, 2007 11:51 pm

I was made redundant in December & was offered my month PILON. i was not required to work for the month of January & my last day of employment was 31st Jan. when i recieved my payslip i was taxed on my salary & my PILON, despite what i have read. the ammount was less than £30k, is this correct?
neill
 
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Postby King_Maker on Wed Feb 28, 2007 12:35 am

Redundancy payments under £30,000 are not taxable - but PILONs may be.

Have you read HMRC's Tax Bulletin Issue 24 on the subject of PILONs?

http://www.hmrc.gov.uk/bulletins/tb24.htm
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Postby Peter D on Wed Feb 28, 2007 12:55 am

A severance payment, if it meets certain conditions is free form Tax on the first 30K but a Pilon is not a severance payment but gardeneing leave and is a full PAYE transaction. Did you not get a severance in addition to the leave.
http://www.hmrc.gov.uk/bulletins/tb24.htm#payment_in_lieu
Regards Peter
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Postby neill on Wed Feb 28, 2007 9:32 am

CRIKEY...! thats some heavy going reading there. BUT alas, it seems that i did have to pay tax on my PILON.. thank you for your assistance...
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Postby Bob Jones on Wed Feb 28, 2007 3:08 pm

Whether a PILON is taxable is dependent upon whether it is part of the contract.
Say a person is contractually entitled to one month's notice and the employer for whatever reason wants rid of them straight away and gives them one month's pay in lieu. If the contract does not provide for that payment in lieu then it will not be taxable. If, however, the contract gives the employer the option of one or the other then a payment in lieu will
be taxable.

Bob
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