Bonefishblues wrote:pete75 wrote:Bonefishblues wrote:I didn't mention ex gratia payment because that would be illegal so not something I have ever done in the various payrolls I have run. Payment in lieu of holiday must attract tax under HMRC rules. The mechanism I alluded to v-a-v a simple additional payment would both attract tax and be free from any linkage to the WTD.
An ex gratia payment is any payment the employer is not contractually obliged to make and are not illegal.The simple additional payment you describe is ex gratia if it is not part of contractual remuneration. Moreover they are taxed if received received with normal monthly pay. If an ex gratia payment is made as part of a severance package then it is not taxable providing it is less than £30,000. In those circumstances they're often used to buy silence.
The normal status attached to an ex gratia payment is free of tax, hence my comments.
Primer, one of many here:
https://www.redmans.co.uk/ex-gratia-pay ... employees/
Yes and that is referring to ex gratia payments on termination of employment. These are treated in exactly the same way as redundancy payments ie tax free up to £30,000.
When I was running a payroll system for 16,000 people we not infrequently made ex gratia payments to people acting up, covering for staff on long term sick etc. These were taxed.