PILON payments and tax

[Steviesam]

As of last year, PILON (payment in lieu iof notice) is taxable.

My question is, do you pay the same tax as if you were paid on a monthly basis, or do they see the 3 months salary in 1 lump and assume you earn loads, and tax you heavily?

Thanks

[davek_964]

I don't think it's just since last year. Redundancy wasn't taxable (first £30k) but PILON has been for as long as I can remember.

Anyway, it made no difference to my tax - not sure why it would.

[edc]

PILON has always been PAYE deductible. The change only applied to notice payments where there was no contractual clause to allow PILON. In those situation you could pay the equivalent of notice free of deduction up to the usual limits as it was compensating for a breach of contract.

[Jasandjules]

Your PILON should be taxed as it would be normally for each month

[Steviesam]

Thanks all.

Just had a meeting with HR, I am being made redundant for sure.

My last day at work will be the 31st Oct, but I will be at home from 14th October. They are using PILON (payment in lieu of notice).

I will be paid 3 x months salary, plus some holiday I have accrued.

When would you expect to be paid that? They told me I will get Octobers pay at the end of Oct (as usual) and the 3 months salary and holiday pay at the end of November. Is that right? Or should I get it all when I leave on the 31st Oct?

Thanks again

Phil

[sparky1pq]

When I got made redundant my last day was 31st March. Got paid for March as usual and then the redundancy, PILON and anything else was paid in the April pay run.

[edc]

sparky1pq said:

When I got made redundant my last day was 31st March. Got paid for March as usual and then the redundancy, PILON and anything else was paid in the April pay run.

That sounds more like you were on garden leave for a month.

[psi310398]

sparky1pq said:

When I got made redundant my last day was 31st March. Got paid for March as usual and then the redundancy, PILON and anything else was paid in the April pay run.

Presumably with effect that your were taxed on that in the new tax year with the new tax code, rather than at the end of the FY you worked. Sounds like they did you a solid!

[sparky1pq]

edc said:

That sounds more like you were on garden leave for a month.

No, not in this instance, employment terminated on 31st March. Free to start work on the 1st April. I actually signed on at that point as I had nothing in the pipeline.

psi310398 said:

Presumably with effect that your were taxed on that in the new tax year with the new tax code, rather than at the end of the FY you worked. Sounds like they did you a solid!

Taxed in the new tax year but didn't make any difference to tax codes other than the minor change between the two tax years. However as I didn't do a great deal in that new tax year I did get a tax rebate later on. I would have preferred a job though.