Termination payments

What is the quirk with termination payments which are compensation for injury/disability?

Exempt from tax

What termination payments are always taxable?

If the payment is contractual and there was a reasonable expectation they would receive it.

What are the tax implications of ER making payment to registered pension scheme?

Tax free

What if termination payment exceeds £30k and is made before p45 issued?

IT deducted from excess under PAYE using EE’s tax code.

What if termination payment exceeds £30k and is made after p45 issued?

Tax is deducted on excess using tax code 0T on a week one/month one basis.

what is the max stat redundancy?

£21,570

What is an EFRBS?

Essentially a pension scheme - where an ER makes a payment directly from company funds to an EE on or in anticipation of retirement.

What are tax treatment of EFRBS?

No £30k exemption is available, it is taxable in full.

What are the 3 ER choices of termination?

1) honour notice period and employee works- all earnings taxed in fill

2) garden leave - all amounts taxable

3) terminate within notice period

What is PILON

represents pay that an employee would have been entitled to if notice period honoured

How to calculate PENP?

(BP * D) / P - t

Is PENP subject to NIC?

Yes Class 1 NICs

What kind of termination benefits are non taxable?

Outplacement counselling or a retraining course

Where is a termination payment taxed in the IT comp?

As top slice - in a fourth column

What are the amounts in excess of £30k subject to?

Employer Class 1A NICs

What do you need to do with termination payments made before the expiration of contractual notice period?

Split into PENP and non-PENP

Employer implications of paying ex-gratia as pension contribution?

Exempt from tax

Tax implications of legal fees on getting advice for termination payment?

Not a benefit as long as they are paid directly to the advisor