Redundancy and Notice Pay - quick question....

Notice pay is taxable, although I think sometimes companies try to get round it by saying it's agreed damages for breach of contract (ie because they didn't give you your full notice).

I notice you said they "try to". Do they succeed? Is it legal?

One could argue, on the basis that the purpose of damages for breach is to put you in the same position as if there had been no breach, that they should pay you the income you lost out on, and that this should be taxed in the usual way. One could also argue, on the same basis, that they should simply pay you the net equivalent. Thus the employee is in the same position he would have been in, but the cost to the employer is reduced by the income tax and employee's NI and employer's NI.

However, your answer relates to the situation where the payment is made by an employer, whereas the OP's question focused on that where it is made by the government when the employer has run out of funds. Here again the argument could go either way.

They used to (it used to be standard practice at my place) but I think HMRC are clamping down on it.

AIUI, whether PILN (aka PILON these days) is taxable depends on whether it's a contractual entitlement (and custom and practice can establish that it is, even if it's not written).

Damages is assesses after tax is taken into account.