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Compromise Agreement Solicitors – Taxation of Termination Pay

November 7th, 2009 · 4 Comments · About Compromise Agreement Blog, Basic Rate of Tax, Compromise Agreement Solicitors, Compromise Agreements, Settlement Payment, Signing Compromise Agreements, Taxation, Termination Date, Termination Payment

We are still being asked about taxation of Settlement Payment or some people refer to it as Termination Payment.

The correct advice is that the first £30,000 of an employee’s Termination Payment will be paid without deduction of income tax in accordance with section 403 of the Income Tax (Earnings and Pensions) Act 2003. If an employee’s Settlement or Termination Payment is over £30,000, then your employer will make deductions of income tax at the basic rate of 20% in respect of the balance of the Termination Payment over £30,000.

RT Coopers Solicitors can advise you in this regard. Contact for a meeting or more specialist advice. We will give you an indication of our costs.  


4 Comments so far ↓

  • onlinehealthmedicine

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  • admin

    The employee only pays the basic rate.

  • setera

    I want to quote your post in my blog. It can?
    And you et an account on Twitter?

  • John Wilson

    Very helpful.

    Does that mean that this is the total liability for tax or if this takes the employee into a higher tax bracket does he have to pay the additional tax above the basic rate?

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