Termination Payments – recent changes, but don’t forget Rule Number 1

Paul Tucker discusses discusses termination payments and a reminder of the changes that have occurred in the past three years

The tax treatment of termination packages is complex.  There have been some significant changes over the past few years. In particular:

  • From 6 April 2018
    • The introduction of the Post Employment Notice Payment (PENP) charge; and
    • The legislation in respect of injury to feelings
  • From 6 April 2020
    • New National Insurance (NI) legislation

Rule Number 1

It is always important to remember the first rule.  The £30,000 tax exemption is not always due!

Consider each element