Consultation on Termination Payments

The Government has started consulting on simplifying the tax element of termination payments.  The proposals are to:-

  1. Remove the distinction between contractual and non-contractual payments.
  2. Change the current £30,000 tax free sum to an amount which would increase with the length of an employee’s continuous employment.
  3. Introduce a two year qualifying period before an employee can receive a tax free payment.
  4. Make injury to feelings awards subject to tax for some or all of the damages awarded.

No specific thresholds are set out yet, however it can only mean a significantly reduced tax free sum being available in the future.  We will keep you updated as the consultation progresses.

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