OV9

Hi all,

I have a question, on behalf of my partner.

Her work is getting shut down and she has been offered a settlement as she doesn't want to move to another department.

She has been given a generous settlement agreement which is quite a lot more than a statutory redundancy.

Only issue is, when she was getting the settlement confirmed by a solicitor, he said that the PILON amount was based on a month's notice (which is in her contract) but the amount should be higher as she has worked for the company for a long time, so it supercedes the month's notice.

Or, at least, I think that's what he meant!

He said that the worst that can happen is that HMRC take a look at the settlement and calculate that the she should be paying more.

I'm a bit concerned by it. I know her employer is trying to do her a favour, but I don't want her ending up in legal ramifications.

What would you do here? Leave it, or ask the employer to re-work it out so that the amount she receives is the correct one. The solicitor even said she should keep money aside incase HMRC come asking for it, so it's not like she use all of it anyway.

Cheers

What's her notice period? That should be reflected in the PILON and then any additional redundancy settlement is at the company's discretion.

My understanding is that if it's PILON then it's subject to income tax and NI as normal, as its payment in lieu of notice i.e. what you would have been paid as salary if you'd worked your notice period. Only a redundancy payment is then not subject to tax.

Alex88 wrote: Thu Dec 12, 2024 9:30 am
I'm a bit concerned by it. I know her employer is trying to do her a favour, but I don't want her ending up in legal ramifications.

What would you do here? Leave it, or ask the employer to re-work it out so that the amount she receives is the correct one. The solicitor even said she should keep money aside incase HMRC come asking for it, so it's not like she use all of it anyway.

Your partner isn't responsible for calculating their tax, so she should go with what the employer has calculated.

I wouldn't expect the tax man to notice (?) - upto £30k in redundancy payment is tax free. click, so it should't really matter if they pay more than her contracted PILON.

If you want a safety net- I'd say nothing to the employer, and stick the difference (between what she is paying and what this lawyer thinks she should be paying in tax) into a Trading212 cash isa, or buy premium bonds with it. If the tax man comes looking for it in the next 5 years or so - you have it - and it will have earned interest or premium bond prizes in the meantime.

Her notice is a month. I think he calculated it that the PILON has been based in 4 weeks pay when it should have been based on 12 weeks. Subsequently, she is getting a higher tax free amount.

It just feels a bit off to me.

mik wrote: Thu Dec 12, 2024 9:43 am

Alex88 wrote: Thu Dec 12, 2024 9:30 am
I'm a bit concerned by it. I know her employer is trying to do her a favour, but I don't want her ending up in legal ramifications.

What would you do here? Leave it, or ask the employer to re-work it out so that the amount she receives is the correct one. The solicitor even said she should keep money aside incase HMRC come asking for it, so it's not like she use all of it anyway.

Your partner isn't responsible for calculating their tax, so she should go with what the employer has calculated.

I wouldn't expect the tax man to notice (?) - upto £30k in redundancy payment is tax free. click, so it should't really matter if they pay more than her contracted PILON.

If you want a safety net- I'd say nothing to the employer, and stick the difference (between what she is paying and what this lawyer thinks she should be paying in tax) into a Trading212 cash isa, or buy premium bonds with it. If the tax man comes looking for it in the next 5 years or so - you have it - and it will have earned interest or premium bond prizes in the meantime.

Interesting, thanks Mik.

I know absolutely nothing about these things. But being a worrier, hearing the solicitor say that the taxman could come after her didn't feel too good. When queried, he said 'I don't think it would be anything criminal'. Er, what? I think that was in jest..

So, the worst that could happen is HMRC could ask for more money?

Alex88 wrote: Thu Dec 12, 2024 9:51 am
So, the worst that could happen is HMRC could ask for more money?

Yep

Thanks Mik

Take the money. Keep quiet. Simples.

Alex88 wrote: Thu Dec 12, 2024 9:45 am Her notice is a month. I think he calculated it that the PILON has been based in 4 weeks pay when it should have been based on 12 weeks. Subsequently, she is getting a higher tax free amount.

It just feels a bit off to me.

Not quite right I think. The PILON should be her notice only. The rest a redundancy payment

Sundayjumper wrote: Thu Dec 12, 2024 10:42 am Take the money. Keep quiet. Simples.

As above.

Dave!

At my old place there were wholesale redundo's in 2017 where 3 months pilon was paid tax-free. Top payout was about 23k iirc, so well under the 30k limit. No-one got investigated.

Cheers all.

Apparently, based on her length of service she should be paying 12 works PILON.

So a fair bit more than the month's notice!