How does being inside IR35 work if you have staff? How does being inside IR35 work if you have staff? - Page 3
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  1. #21

    Contractor Among Contractors


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    Quote Originally Posted by jamesbrown View Post
    I thought that 30k redundancy payment was only tax-free if non-contractual
    Yup. A few other criteria too, but yes, if it's contractual, it's not ex gratia.

    Quote Originally Posted by jamesbrown View Post
    and, more importantly, that the tax-free element disappeared in 2018... pretty sure they made contractual and non-contractual PILONs taxable at that point.
    My understanding is they made some minor tweaks that basically made it crystal clear PILON was taxable. Prior to that HMRC certainly viewed PILON as taxable anyway, but there was some ambiguity.

    Is it possible to have non-contractual PILON?! Surely to be PILON (payment in lieu of notice), there must be an agreed (ie in a contract) notice period. If the notice period is in the contract, payment for it is also obligatory. Hence to my mind payment for any notice period must be contractual, so in turn PILON must be contractual too?

    Anyway, I think we're agreed Really Not Real's wife's redundancy would not qualify as tax free, sorry RNR! In practice I struggle to think of any situations where a contractor type company could pay out a £30k tax free redundancy to the owner/significant other.

  2. #22

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    Quote Originally Posted by Maslins View Post
    My understanding is they made some minor tweaks that basically made it crystal clear PILON was taxable. Prior to that HMRC certainly viewed PILON as taxable anyway, but there was some ambiguity.

    Is it possible to have non-contractual PILON?!
    I think those tweaks were precisely related to whether the payment was contractual or non-contractual. If a payment is non-contractual then, technically, it may be classified as something else(?), but I distinctly recall the discussion at the time about the non-contractual loophole, which was closed.

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