Payments made by an employer in connection with the termination of an employment, or a change in duties or earnings, are assessed under ITEPA 2003, ss 401–416 (Pt 6, Ch 3). See the detailed commentary in Division E4.8.
This article discusses how the taxation of termination payments applies to internationally mobile workers.
Termination payments 2018/19 onwards
F(No 2)A 2017 introduced legislation from 6 April 20181 that:
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•ÌýÌýÌýÌý treats certain payments made in lieu of notice on termination of employment as taxable and subject to NIC as general earnings2, and
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•ÌýÌýÌýÌý prevents payments made for injured feelings (but not payments made for psychiatric injury) from being exempt from income tax under the legislation in ITEPA 2003, s 406 that applies to payments made in cases of death, injury or disability3
Termination payment legislation
The rules which tax termination payments are independent from the rules for general earnings (an exception applies to certain payments in lieu of notice from 6 April 2018, see above).
This principle
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