A PILON is a payment made to an employee when their employment is terminated without notice (ie in lieu of the employee working through a notice period and receiving pay in the normal way).
Until now, PILONs could be paid free of tax and NICs where they were either compensatory awards or non-contractual payments. However, from 6 April 2018 the position will change …
… from 6 April 2018, all PILONs will be subject to both Tax and NIC as employment income.
If you would like further information and guidance on PILONs, or wider employment tax issues, then please contact Lee Reynolds or Andy Summers on 01788 539000.