Changes to the Taxation of Termination Payments

25th June 2011
Changes to the Taxation of Termination Payments image

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.


Cancer Research UK Free Will Service image

Cancer Research UK Free Will Service

Maples Solicitors are pleased and proud to announce that it is working in partnership with Cancer Research UK to offer their Free Will Service for the over 55’s.

The vast majority of people have been affected in some way by cancer and we wish to support Cancer Research UK in its life saving work by offering their Free Will Service.

Over a third of Cancer Research UK’s research is funded by gifts in Wills and we believe we can play a vital role in helping in the fight against cancer. Writing your will for free using the scheme could help beat cancer sooner.

Please contact a member of our Wills 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

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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 ACILEx

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.