Termination payments, whether in cash or benefits in kind, are made to individuals for the loss of their job. This document discusses when the payments are fully taxable, partially taxable or fully exempt depending on the nature and the amount of the payment. It also covers the detail on the £30,000 exemption; valuation of non-cash benefits; NIC implications; and reporting and collection of tax.

Points discussed within this guidance note:

> Termination payments

When a person has lost his job he may receive a payment, which depending on the circumstances could incur a tax on termination payments by the individual even if the payment went to his spouse, civil partner or dependent. This note considers what payments are termination payments and when the payment was made to incur a tax liability.

> Exempt payments

Where the payment is fully exempt from tax, it does not use up any of the £30,000 threshold. This note goes into further details about which payments are exempt from tax.

> £30,000 exemption

> Valuation of non-cash benefits

> NIC implications

> Reporting and collection of tax

> Taxation of termination payments - advising the employe

> 2018/19 reform


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