Hello Rob,

As agreed, your notice period is 2 months and you may either be asked to work this notice period or be paid in lieu of notice.

You do not have an automatic right to be paid in lieu of notice.

Hope this clarifies.

Yes, you can get it tax free if they decide to pay you in lieu as the PILON (pay in lieu of notice) is not in your contract.

You can get up to 30,000 pounds tax free.

Hope this clarifies. Please take a few seconds to rate my answer

Hi, my colleague's answer has not explored a specific concept in employment law known as Auto-PILON, which could easily be applicable in your case and would mean that you cannot claim a tax-free PILON.Unfortunately, HMRC considers that some non-contractual PILONs may still be taxable under section 62 of the Income Tax (Earnings and Pensions) Act 2003. This will predominantly occur where the making of a PILON could be said to be an "automatic response to a termination".As an example, in the case of SCA Packaging Ltd v HMRC, the Revenue argued that, even if there was no contractual source for the PILONs paid to the employee, they should be taxable as emoluments, as the company had made such payments "as a matter of invariable practice".

Sorry, ran out of space so have to continue here:

Finally, the issue with these is that each case must be looked at individually and the employer's past practices considered in great detail. However, the advice that you were given saying you can get it tax free just because it is not in your contract is dangerous and incorrect as HMRC has traditionally taken a hard line approach in such circumstances and great care must be taken to ensure you do not end up with a high tax liability in the future.

Important: As professionals on this site, it is extremely important that our customers rate our service. This only takes a few seconds. I would therefore be grateful if you could please click to rate my service before continuing.

If you feel the need to rate as one of the lower two scores, please reply to me via the REPLY or CONTINUE CONVERSATION button with any further questions you have. I will be happy to assist further and clarify anything you need me to. Thank you

I am sorry for the intervention above by a colleague.

Please see this article which supports my answer: http://plus.indicator.co.uk/personnel/models/employment_documents/contracts_of_employment/pay_in_lieu_of_notice_clause

Also, you have been incorrectly been led to believe that any tax liability will be on you the employee, it is not so, any tax liability would fall on your employers.


Following the Privy Council case of Reda v Flag , HMRC appear to accept that it is rare for an implied term to become incorporated into a contract of employment by reason of custom and practice if it conflicts with an express obligation (e.g. an obligation to serve notice) in the contract and in your case, your employer is not a big company but a couple and it is unlikely that it has become custom and practice that they pay in lie of notice routinely.

Hope this clarifies.

41082.508

THIS ANSWER IS LOCKED!
You can view this answer by clicking here to Register or Login and paying $3.
If you've already paid for this answer, simply Login.

THIS ANSWER IS LOCKED!
You can view this answer by clicking here to Register or Login and paying $3.
If you've already paid for this answer, simply Login.