Changes to the Taxation of Termination Payments

19th July 2017

Changes to the Taxation of Termination Payments

Many businesses may be aware that the first £30,000 paid to an employee as a non-contractual termination payment (say under a Compromise Agreement) can normally be paid free of tax. However the tax treatment on any amount in excess of £30,000 has recently changed.

Previously the employer only deducted tax at the rate of 20% on any excess over £30,000, using the tax code BR. In the event that the employee had an additional tax liability over the basic rate, say because the employee was a higher rate tax payer, then the employee was personally responsible for accounting for this through the self-assessment process. Now the employer is required to deduct the full tax liability on a termination payment in excess of £30,000 through the PAYE system using the tax code OT. This tax code assumes that the employee has no personal allowances available and requires the employer to tax the termination payment in excess of £30,000 on the employee’s appropriate rate of tax (e.g. basic 20%, higher 40% etc).

For more advice on this subject please contact Daven Naghen on 01775 722261, daven.naghen@maplessolicitors.com or 23 New Road, Spalding, Lincolnshire PE11 1DH.

Delays at the Office of the Public Guardian

A Lasting Power of Attorney must be registered at the Office of the Public Guardian before it can be used by your attorneys. Applications to register Lasting Powers of Attorney are now taking approximately twenty weeks to be finalised and the Office of the Public Guardian are recommending that you do not chase an application until six weeks after their suggested time frame. In many cases, this time frame can put significant pressure on family members or friends who need to start acting as an attorney.

In some cases, people are attempting to prepare and register their Lasting Powers of Attorney themselves and if the documents have not been prepared correctly and accurately this is resulting in further delays at the Office of the Public Guardian putting further strain on those needing to start acting as attorney. We would therefore recommend that Lasting Powers of Attorney are drawn up professionally to ensure that delays at the Office of the Public Guardian are kept to a minimum and are registered as quickly as possible. A Lasting Power of Attorney that has been drawn up professionally also has the benefit of minimising the risk of any potential undue influence or even fraud.

To discuss Lasting Powers of Attorney, please contact one of our lawyers in the Wills, Lasting Powers of Attorney and Probate Department:-

Jamie Dobbs- jamie.dobbs@maplessolicitors.com
Jane Mawer- jane.mawer@maplessolicitors.com
Faye Blair- faye.blair@maplessolcitors.com

Or telephone the office 01775 722261 and ask to speak with one of the team.

Jamie Dobbs FCILEx

"I should like to take this opportunity to express my very sincere and grateful thanks for Jamie's unfailing helpfulness and efficiency in all aspects of the handling of my late stepmother's estate. Jamie have always replied to my (many!) queries promptly and comprehensively which has been a enormous help throughout what I know can be a fraught and stressful process. Sadly, it is increasingly rare these days to experience the highs standards of service that Jamie has provided."

Gemma Mayer LLB

"I would highly recommend Maples Solicitors, especially Gemma Mayer, for any conveyancing work. The level of support and professionalism was excellent at all times. I also felt if I needed to ask or clarify anything that it was not an issue. Buying and selling a house is stressful enough, but Gemma helped me through it step by step."

Anita Toal LLB BA

"I think you are brilliant. You can use my comments above. You are efficient, friendly and quite clearly very good at what you do. Mainly you don’t leave people hanging around too long for." "So easy to talk to her and she understood what I wanted. She put me at ease and I cant thank her enough"

James Turner BA

James Turner was extremely helpful with our buying process. Everything went smoothly. We are very happy with the level of professionalism demonstrated by the office. Highly recommended solicitors. Will definitely do business with them again.

Daven Naghen LLB

"Daven provided an excellent service, from attending the first interview with me to the final court appearance. He filled me full of confidence that he would defend me to which he did and come out with an excellent outcome in view of my position that I had put myself in."

Faye Blair LLB

Faye was excellent, sensitive and acted very well to the time constraints we faced. Great service and dealt with compassion at such sad times made the process less painful very professional.

Jamie Dobbs GCILEx

Over the last forty years I have cause to deal with many law firms both in a personal and professional capacity, including some ‘top’ London Companies. In all of those dealings I have never found anyone as proactive and so willing to offer help and advice as Jamie Dobbs. During the last two years Jamie guided my parents through the completion of Lasting Powers of Attorney. Helped myself with the use of the LPA and recently dealing with Probate and Estate Administration following their death.

Mike Pepper MA

Mike Pepper gave us excellent advice. He was always most helpful and accommodating giving lucid explanations every step of the way. Thank you Mike.

Donna Sandison FCILEx

Donna has been helpful and professional every step of the way during the process. Always on hand to answer any queries and totally professional and friendly at all times.

Changes to the Taxation of Termination Payments