A client company is making an employee redundant. She's been there a lot less than two years (six or seven months), so she's not entitled to statutory redundancy pay.
They are, however, going to make her an ex-gratia payment of about £300 - roughly one week's wage. There's no contractual obligation to pay this - they're just doing it because they're nice people.
I'm thinking that this is not taxable. Any thoughts ?
Replies (6)
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Sounds good
I think it would work but if you have any doubts at all I recommend speaking to ACAS. They are great with this kind of advice.
If non-contractual and not usual in the industry, then it should not be taxable (under £30,000).
Hi
Document it properly. Ex-gratia redundancy payments which are not taxed through PAYE are frequently challenged by HMRC. Not necessarily for this low amount though.
Presumably this is in addition to notice pay
Presumably any contractual notice pay will be taxed?