Which tax year should I be taxed in?

[rcoleman]

Hi

If I agreed to terminate my employment in exchange for payments in lieu of notice, holiday and bonus, does the payment have to be taxed in the same tax year as the termination of employment?

For example, assuming my employment terminates on the 1st April 2019 and the payments were made on the 10th April 2019, should my employer tax it in the year 2019/2020 or are they obliged to make a year end adjustment and treat it as a payment made in 2018/2019?

From what I have been able to gather so far, the bonus is taxable in the year it is received. So if it was paid on the 10 April it should be taxed in the year 2020/21. Is that right? But I can't find any information about the payments in lieu of notice and holiday.

This seems to be a rarely asked question so I hope somebody knows the answer! Many thanks for your valuable help.

[rcoleman]

Sorry, made an error, just to correct myself the above should have read "So if it was paid on the 10 April it should be taxed in the year 2019/20"

[darthblingbling]

Earlier of legal entitlement or when it's paid. Check the settlement agreement

[rcoleman]

Earlier of legal entitlement or when it's paid. Check the settlement agreement

Hi, thanks a lot for reply.

Settlement agreement says
Termination Date is 1st April 2019.
PILON/Holiday/Bonus will be paid on 10th April.

Not sure what constitutes legal entitlement. Could you explain a bit more?
Thanks

[rcoleman]

Also, does that apply for all three payments? PILON, Holiday and Bonus?

[darthblingbling]

Sounds like it'll be taxed in 19/20