lump sum on ill health

[daveyeff]

hello...just a quick question for any clued up reps regarding the lump sum on retiring due to ill health. i left the business last weekend 27th July. i received the mandatory 16 weeks agreed by the union and also got the 12 weeks p.i.l.o.n. so 28 weeks in total coming to just under a derisory 15grand (it is what it is)...anyway, today i got paid the money, only to find ive been taxed to the tune of £1558. i was under the impression we only paid tax on the p.i.l.o.n.amount and not the full 28 weeks. any reps or indeed any one else who has been in the same situation....they also told me i am not due ANY holiday pay..which i cant get my head around...theres 4 weeks from this year that i havent taken yet....they said i owed THEM 2 days...but the COM said he's not bothered about that....cheers for any replies.

[Hitbox]

the amount of Tax you paid is correct for the 12 weeks PILON payment.

https://www.gov.uk/termination-payments ... surance-on

any type of PILON payment you'll pay tax. i paid the exact same tax amount on mine too.

so nothing different there (I ill health retired in December 2023)

The payment on your wage slip should show up as 2 seperate payments, but in your bank account should be just one payment.

because you have lost access to the RM People app - you have no way upon double checking your outstanding Annual Leave .

if you have any papers showing this current annual leave bracket upon how much you have left to book or have already booked. you'll need to get in touch RM themselves as since you've left RM, the union doesnt handle anything to do with ill health under any circumstances.

as I got back over 5 weeks annual leave, you kinda dodged abit of a bullet as RM apply emergency Tax to it once they process your ill health too as they process the annual leave part after they've gotten rid of you in the PSP system. sneeky...

[daveyeff]

i appreciate your reply..i really do...but how can the tax possibly be correct on 12 weeks p.i.l.o.n.... on a flat week at work i have £534.46 on top line and i come out with £448.52...thats a weekly deduction of £85.54..of that deduction i pay £50 a week tax..£31.00 national insurance, £3.58 union subs, and a pound goes to charity. my 12 weeks p.i.l.o.n was 12 flat weeks of £534.46 coming to £6413.52. so the tax on that at £50 a week should have been £600. not £1253.60....thats more than double the tax i pay on a weekly wage...it simply can't be right...i will just wait and see if i get this back on a tax rebate as you can no longer speak to the pay people .....only email them but they don't reply....31 yrs service...thank you davey, now f**k off

[P13]

The income tax on your pilon should be 20% which would be just over £1200.
The first £241 you earn in a week is 0% income tax the rest is taxed at 20% if you don't work again this financial year you may be due a tax rebate depending on how much your total earnings for the financial year are.

[daveyeff]

Thank you, that has given me a much clearer understanding of it. and it works out exact on those figures. But I have to say once the £241 came off my pilon lump sum, then they've taxed the rest of my p.i.l.o.n. as my weekly wage at 20%. But it isn't my weekly wage. Its 12 weeks wages. My weekly wage is 534 not 6413. They must know full well we don't make that every week, although I wish we did.

[daveyeff]

i have now received a reply from human resources. its told me what i suspected all along. they've said your payment of the lump sum is a lot more than hmrc would expect you to be earning in one week. and because they dont know that this might not be your new weekly wage going forward, they apply a "knee jerk emergency tax reaction". this happens all the time with "spike payments". all we can do is suggest you call hmrc and tell them it was your ill health retirement lump sum and a tax rebate will no doubt be made.

[denowashere]

I haven't come across any postie who wasn't put straight on to the emergency code (you get hit by 40% tax) royal mail leave it to you to sort that out, someone posted on here a while ago a procedure a manager can do to to avoid this ,but as you probably know manager's don't give a s**t the same as the cwu talking of the latter don't forget thanks to them your £8000 out of pocket thanks to the last pay deal.

[KilledOff]

Hi all,
Regarding PILON payment of 12 weeks.

Does anyone know if you get fewer PILON payment weeks if you're a Part Timer?

I've been granted IHR as a Part Timer, but have only been granted 9 weeks PILON.

Cheers.

[P13]

Hi all,
Regarding PILON payment of 12 weeks.

Does anyone know if you get fewer PILON payment weeks if you're a Part Timer?

I've been granted IHR as a Part Timer, but have only been granted 9 weeks PILON.

Cheers.

Pilon depends on length of service , usually between 9 and 12 weeks

[KilledOff]

Hi all,
Regarding PILON payment of 12 weeks.

Does anyone know if you get fewer PILON payment weeks if you're a Part Timer?

I've been granted IHR as a Part Timer, but have only been granted 9 weeks PILON.

Cheers.

Pilon depends on length of service , usually between 9 and 12 weeks

Thanks P13 you are correct .
I've done some digging myself too and have come to the same conclusion.

Cheers.

[mrcurve]

I would give HMRC a call, best done at 8am, it may take a while to get through, you can then tell them about any income you now have pensions etc, and they will then adjust your tax code, they are very helpful and can sort out any tax refunds you may be due.

leaves a bit tricky, you may have taken more holiday than you had built up when part way through the year, Line managers can update this with your last day of service, which may not have happened.

[flimflamman]

Hello,I'm resurrecting this thread in the hope someone could help,I left royal mail due to ill health about a week ago and received my pilon and lump sum payslip a couple of days ago,much the same as the original poster my pilon was £6413.64 and tax paid £1850.50 which i assume is wrong,I am hoping that one of you guys would know if HMRC will refund an overpayment automatically or would I need to attempt to chase them up,
Thank you

[Chris19]

I left RM with IHR, tax year 23-24. I received 12 weeks pilon of £6142.68, tax paid of £1220.60. I contacted HMRC by telephone and written appeal. Obviously, pointing out I paid more tax on the PILON lump sum than if I had received it over 12 weeks. My appeal was received in November and I got my reply last week.
Your Payroll Office used a tax code 1269L against your PILON, which is correct. If you have any queries on your PILON payment being taxable, then I would ask that you please contact your Payroll Office for clarification.

[RobertT]

Hello,I'm resurrecting this thread in the hope someone could help,I left royal mail due to ill health about a week ago and received my pilon and lump sum payslip a couple of days ago,much the same as the original poster my pilon was £6413.64 and tax paid £1850.50 which i assume is wrong,I am hoping that one of you guys would know if HMRC will refund an overpayment automatically or would I need to attempt to chase them up,
Thank you

You seem to have paid tax at around 29%. Does that include income tax and NIC's?

If so, the amount you paid in the short term is probably correct because tax is paid on income in the pay period you receive it. The fact it actually relates to 12 weeks pay in one go, is irrelevant.

Whether you're entitled to any refund will depend on your total income for the whole financial year.
So if you have no other income or only a fairly small amount during 25/26, you should get most if not all of that tax back.

If you give it time things will work themselves out automatically, but you won't get a refund(if your entitled) until the following tax year.
If you claim, you should in theory get it a bit quicker.

[RobertT]

I left RM with IHR, tax year 23-24. I received 12 weeks pilon of £6142.68, tax paid of £1220.60. I contacted HMRC by telephone and written appeal. Obviously, pointing out I paid more tax on the PILON lump sum than if I had received it over 12 weeks. My appeal was received in November and I got my reply last week.
Your Payroll Office used a tax code 1269L against your PILON, which is correct. If you have any queries on your PILON payment being taxable, then I would ask that you please contact your Payroll Office for clarification.

Tax is paid on income in the pay period you receive it, so the amount you paid sounds about right to me based on the basic rate of 20%.

Whether you're entitled to a refund will depend on your total income for the relevant financial year, so you presumably earned too much to qualify for one?