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Taxation date for Payment in lieu of Notice

Is date of PILON the termination date or the date of payment?

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If an employee agrees to leave employment and the settlement agreement says that they will be paid 2 months Pay In Lieu Of Notice, is the payment taxable in the tax year that the payment is received or in the tax year within which the date of termination falls? 

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By paul.benny
28th Mar 2019 10:36

I would use the date when the settlement agreement states that they payment is due.

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By carynw
28th Mar 2019 10:43

the date the payment is actually made is the tax point

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By Cloudcounter
28th Mar 2019 10:44

It is surely taxable on the date of actual payment.

The period when it was earned or due is not relevant

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By tom123
28th Mar 2019 11:42

Does that vary for directors?

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By Cloudcounter
28th Mar 2019 13:53

Why would it?

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By Wilson Philips
28th Mar 2019 14:13

Tom123 will be thinking about the special rules for directors, although in the case of a PILON it is more likely than not that the same taxpoints will apply, so in practice no difference.

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By Andy Gilliland
04th Apr 2019 10:34

Tax is due at the time of payment, the accounting treatment of the tax is itself complicated if payment to the employee and year end fall before a new tax year.

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