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06 January 2025
Termination payments – problems and opportunities
Termination payments – problems and opportunities.
Termination payments have long-been an area of ‘confusion’ from a tax angle with advisers finding that many clients believe that the first £30 000 of a termination payment can automatically be paid out on a tax-free basis. Sadly the reality is much more complicated than that.
However some termination payments can still be validly regarded as non-taxable in the UK such as:
- employer pension contributions on termination which are paid directly by the employer into an employee’s pension fund (subject to issues such as the annual allowance);
- legal costs associated with the termination of an employee’s contract (where the employer pays these costs directly to the lawyer);
- statutory redundancy payments; and
- ex-gratia redundancy payments to the extent that they are genuine – above statutory redundancy pay – and not related to accrued holiday pay bonuses or...
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Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
