Hello does the contract say pilon is possible?
Ok if the contract contained a PILON clause allowing your employer to terminate your employment under PILON, then the notice pay will be taxable as it is a contractual payment.
If here is no PILON clause but the employer has a custom of making PILON payments, HMRC may seek to tax the PILON under section 62 of ITEPA 2003, either on the basis that an implied contractual right has arisen, or on the basis of an "auto-PILON".
Auto-PILON’s arise when a non-contractual PILON may still be taxable under section 62 of ITEPA 2003 and be liable to tax. This will occur where the making of a PILON could be said to be an "automatic response to a termination". This is again a custom and practice point, which would depend on whether PILON’s are made as a matter of course by this employer. If there is a variation in their procedures and some employees are paid PILON whilst others are asked to work their notice period, then it would be more difficult to make this an auto PILON, which means it will not be taxable.
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