Redundancy payments and tax question

[MitchT]

There are some potential redundancies happening at work and one could be me. I'm told that the statutory redundancy payment and the 12 weeks notice pay are tax free, so you receive gross rather than net, but what happens if you secure another job before the end of the financial year? Do these things then count towards your year's earnings and become taxable, such that you end up paying tons of tax on the earnings from your new job to make up what you didn't pay on the payoff from your last job?

[randlemarcus]

No.

There may be implications if you go back to work for the same company, but otherwise, you can walk into another job tomorrow, and you're OK.

[edc]

Notice pay is not necessarily tax free. It is only tax free if there is no provision for payment in lieu of notice in your contract.

[MitchT]

edc said:

Notice pay is not necessarily tax free. It is only tax free if there is no provision for payment in lieu of notice in your contract.

I was told by the HR department that it's tax free, so I'm guessing it is. My question was focused on the possibility of it becoming taxable at a later date if I start work again before the tax year finishes.

[New POD]

MitchT said:

edc said:

Notice pay is not necessarily tax free. It is only tax free if there is no provision for payment in lieu of notice in your contract.

I was told by the HR department that it's tax free, so I'm guessing it is. My question was focused on the possibility of it becoming taxable at a later date if I start work again before the tax year finishes.

I didn't qualify for redundancy but I did qualify for 3 months pay in lieu of notice, and when I tried to get TRELLEBORG to pay it as if it were redundancy, they refused, saying I'd have to take it in 3 payments and pay NI and Tax on it. 2 reasons : HMRC won't allow it, and they had cash flow problems and if all 45 people on our site wanted 3 months pay early, it would cause real cash problems. I offered to split the savings, but they refused.

[edc]

MitchT said:

edc said:

Notice pay is not necessarily tax free. It is only tax free if there is no provision for payment in lieu of notice in your contract.

I was told by the HR department that it's tax free, so I'm guessing it is. My question was focused on the possibility of it becoming taxable at a later date if I start work again before the tax year finishes.

Check your contract for PILON. It will only 'become taxable' later if the payment was not eligible to be paid tax free in the first place. You will only pay more tax later if your tax code is changed. There is no reason for it to change here so you will pay tax as normal.