Changes to the Taxation of Termination Payments

19th July 2017
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.


Newly Appointed Partner image

Newly Appointed Partner

Maples Solicitors LLP are delighted to announce Chris Ayre became a Partner of the firm from 1st January 2021.

 

Managing Partner Mrs Anita Toal said “Chris has been a loyal member of the team since he joined us as a fresh-faced teenager and office junior many years ago. Over the years, Chris has increasingly taken on more and more responsibility and has been responsible for most of the day to day management of the firm for some time. Chris’s support of and commitment to  Maples has been consistently outstanding-never more so in 2020. We hope Chris will help the firm continue to flourish for many years to come”.

 

Chris commented “Maples has been like a home to me for nearly 20 years so I was thrilled when the very unexpected offer of Partnership was made. 2020 was a challenging year for everyone and let’s hope 2021 can be the start of a new brighter future”.

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Testimonials

Jamie Dobbs SCILEx

"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.