Termination payments are payments made to an individual at the end of his employment. The law on termination payments also covers payments for varying the terms of an individual's employment relating to their pay and duties (which can include loss of rights).
Termination payments can take the form of cash or benefits in kind. The payment will either be fully taxable, partially taxable or fully exempt depending on the nature and the amount of the payment.
Depending on the circumstances, termination payments can be treated for tax purposes as:
- benefits in kind
- restrictive undertakings
- benefits from an employer-financed retirement benefits scheme (EFRBS)
- termination payment - see the Termination payments - overview guidance note