Anyone know anything about tax on notice period in redundancy situation?

[susan_1981]

There are redundancies at work and I'm considering going voluntarily. They have sent me calculations as to what I am likely to take home as a result. They are offering more than just statutory redundancy. They have broken down the figures to show it as follows:

• my notice period
• the statutory redundancy payment
• the enhanced part

Then underneath that, it totals up the statutory and enhanced part of my redundancy which says to be paid tax free and then it gives the notice period amount as the amount to be paid subject to tax and NI then goes on to say "unworked notice may be subject to deductions. The firm will apply such tax efficiencies as are available." Does this mean that the tax could be at a reduced rate or is it just a posh way of saying normal tax and NI will apply?

 

[My_First]

Redundancy is a complex tax one, but from my basic understanding anything up to 30k is tax free so redundancy pay and enhanced should be tax free. But normal holiday and pay are taxable. However the months notice is a complex and really varies how they will pay it I. E. lumped into the whole redundancy pay or seperatly.

Some good guidelines here:
https://www.hmrc.gov.uk/individuals/redundancy-ee.htm

 

[vegazbaby]

when i was made redundant i have my redundancy plus 3 months notice pay, i would have paid tax on the 3 months but not redundant however the business took a step to shut up shop early and let us go to get other jobs rather than garden leave for 3 months, this was called pilon, payment in leau of notice, which they rolled in the 3 months pay in with the redundancy so we didnt pay tax, thats my experience of it, can you ask anyone at work

 

[susan_1981]

Thank you. I have volunteered so if they accept me, then I'll ask them. It's still worthwhile for me to take the redundancy whether the notice is taxed or not. I was just curious as to whether it was just something that you can negotiate or not x

 

[kanga]

Contractual (ie as stated in your employment contract) redundancy payments are taxable for sure. Your employer will deduct tax and in at source. Discretionary payments, ie non contractual, are arguably non taxable up to a max of £30k.

If the enhanced part is n your employment contract then it's taxable and you'll receive the net amount in your pay packet.

 

[susan_1981]

I wish I could find my employment contract!

 

[kanga]

HR will give you a copy.

 

[susan_1981]

Thanks. I've emailed them today. I'm sure it'll take them until well after the redundancy situation is over to give me a copy!