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Pay or delay?

01 March 2011
Issue: 4294 / Categories: Forum & Feedback , Admin
An employee is to be made redundant in February and will receive a payment in lieu of notice. Would there be a tax advantage in delaying payment until after 5 April 2001 to benefit from lower tax rates?

I would be very grateful if Taxation readers can enlighten me on the tax aspects of following question.

It seems straightforward but I would appreciate confirmation of the situation as well as any other related advice on this topic.

My client has been advised that she is to be made redundant and the date of termination of the employment would be 28 February 2011.
I am satisfied that the payment in lieu of notice (PILON) which will be received will be subject to tax and National Insurance under PAYE and that the £30 000 exemption will not apply following recent tribunal decisions and HMRC policy.
The client is liable to higher rates of tax in the current year but bearing in mind the present state of the economy she is not very hopeful of maintaining her level of income in 2011/12.
If the employer...

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