paying income tax on pilon

[roizee2009]

recently my employment was terminated for health reasons, my hr department informed me that the pilon would be exempt from tax, when i received my final payment from the employer the whole ammount had been subject to tax, i contacted the relevant tax office regarding this they confirmed that the whole amount was taxable.
are they right as i have seen on forums that pilon is only taxable if mentioned in the contract of employment.
my contract made in 1997 has no mention at all of pilon,can i appeal?
i would look forward to any help or advise on this matter.
many thanks
roizee2009

[Tom Braider]

Very, very complex subject. It's not just about what's in the contract, especially when health reasons are involved. Contact your tax office; they'll want to see the employment contract and any documents to do with the ending of your employment, including medical certificates.

[factor-fiction]

This one probably needs buildersmate but as he's not been on for a while I assume he's away on holiday- or he's been attacked by a swarm of those bumble bees living in his garden.
There is quite a bit about this on the HMRC site and in sites like this http://www.tax.org.uk/attach.pl/5826/6487/035_ TA_0807.pdf

[themas]

This depends on your leaving date. There are two possibilities:

1. You were on "gardening leave", and your actual leaving date was the date you were paid up to (it will be on your P45). In this case, the payment is taxable.

2. You did not work out your notice period. For example if your employer should (under your contract or under the law) have given you 4 weeks notice but instead told you to go without giving you any notice then you would be entitled to 4 weeks pilon and your leaving date on your P45 would be the date you actually left - i.e. 4 weeks before the date the pilon was paid up to. In this case, the pilon is not pay - it is compensation for breach of contract because the employer broke the contract by not paying you for the notice period. In this case, the pilon is not subject to tax or NI.

[themas]

Just to add. If your employer told you it would not be taxed then go back to them for a proper explanation. Incidentally, if you have worked there since 1997 you are entitled to 10 or 11 weeks notice under the law (1 week for each complete year of service).