Should this payment be tax free?

[OhThatHappenedWhatNow]

under 2 years service. was called in to the office yesterday morning and told they were letting me go.

my contract states: The prior written notice required from you or the Company to terminate your employment shall be 4 weeks.

I understand I will pay tax and NI on this as it’s PILON. As a goodwill gesture (their words) they have offered me an extra months pay as compensation for loss of my job. Would this amount qualify as tax free Ex gratia, and if I request it do they have to oblige?

thank you

It’s not a redundancy situation, so no. HMRC have really tightened up in recent years when it comes to taxation of severance payments which don’t qualify as redundancy. Your employer will have to follow correct procedure and deduct tax and NI.

Did you not like the answers on your other thread?

Your notice pay salary and accrued but untaken holiday have to be taxed. The extra month can be paid tax free. I’m an employment solicitor

This is incorrect

It was a very mixed response so I thought posting in legal might point me in the right direction.

I’m sure you can appreciate how stressful losing my job with zero notice is.

Thank you. When you say can be paid tax free does that mean they don’t have to when I request it?

You could call acas for advice,

They don’t have to do anything because they don’t have to make the payment to you. They could offer you any sum at all. It could be £1. If they have offered you severance equivalent to a months net pay then that’s what they are intending to give you. If they have offered you a sum equivalent to a month’s gross pay then that it what they are intending to give you. It’s unlikely they will be putting the sun through as taxable pay though since then they will have employers NI to pay.

just ask whether the offer is a months net pay or a months gross pay

Thank you
I appreciate you replying