PILON payment

[Justapleb]

Hi all, I'm looking for a accountant/tax guru on this one I think?
I am in a position of redundacy and have received a settlement agreement.
I am happy (ish) with the numbers but want to have a proportion of my PILON paid into my pension. I have suggested they put my PILON through the PAYE system which would sort pension, tax & Nic's etc exactly as usual.
From what I gather PILON is taxable income so why are they reluctant to treat it this way and keep avoiding an explanation and just saying no?
They just keep saying tht tax & NI will be deducted and thats it.
Cheers

OK, so I've finally got a reason, it's a truly grey area of taxation but because my termination date is before payment is made, it's subject to PENP rules. I'll leave the thread alive in case someone else finds themselves in the same position
Specifically: Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), sections 402A to 402E:
Any part of a termination payment that represents unworked notice is treated as general earnings. Because it is statutory general earnings, it remains strictly subject to PAYE income tax and Class 1 NICs BEFORE pension contribution.

So, I could put it into my pension after and claim the tax relief IF I had enough relevant earnings to do so. But I would lose the NICs.

I had the exact same situation earlier this year, my former employer gave me a flat refusal when I asked them to pay PILON into my pension and no reason given. After a bit of head scratching I opened a SIPP, the provider automatically refunds the tax at basic rate and if you’re a higher rate tax payer you can then claim the remainder of the tax back from HMRC.