Is it the end of the line for PILONs?
Did you know that soon, PILONs could be a thing of the past? No, not Pylons as for now we’ll still need those for carrying our electricity. What we mean here are PILONs, aka Payments in Lieu of Notice or, the amount of money some employees are given in exchange for not working their notice period.
History of the PILON
Our very own tax expert, Matthew Harrison has written an article for Green Umbrella in which he explains, “Historically, where an employee didn’t work their contractual notice period they received a ‘Payment in Lieu of Notice’ or PILON as they became known. Over time, a whole series of case law developed around whether this should be taxable or not. The question that arose was ‘Is the PILON a contractual right or not?’ If so, then it would be subject to tax and national insurance under the normal earnings legislation.”
However, if not a contractual right then it could be classed as damages instead which would have tax, national insurance and structure of contract implications.
The Whole Story
Rather than us re-write the well written expertise of our colleague Matt, we’re going to direct you straight to his article to find out the rest.
Read all about how this could be the end of the line for tax free PILONs.