Content
Leading article...
We can't go on like this...
General tax...
The name is Bond
Blessed are the givers
Excuses, excuses
PAYE the penalty
Silver and gold
Moving goalposts
Doctor, doctor...
Something phishy
Pension problems
Tax dot com
Unpleasant discoveries
Fair's fair (at last)
Chartered taxpayers
This year, next year
VAT...
Focus your mind
Flat rates aren't flat
Reverse the charges
Flapjack flash
Ready set ECSL
A lofty idea
Law items...
I want my lawyer
Not on my holiday
A grey area
No difference
| If you lose your job, a golden handshake could be the silver lining. Traditionally the first £30,000 of a pay-off has been regarded as tax-free - but don't count on it, because the taxman usually wants a slice of the whole thing. The exemption applies if the payment is purely "for losing the job" - damages for the employer's breach of contract in sacking you, or a wholly unexpected thank you to compensate you for the shock. If you have the right to the payment in your contract, then it's taxed in full as pay. Even if you don't obviously have the right, HMRC may try to read it in. For example, if you have the right to three months' pay in lieu of notice, but your employer just pays you the cash to go immediately, they will look for anything that indicates the employer has a choice between these two routes. If so, it's paid under the contract, and it's taxable. There have been recent cases in the Tribunal which show that this is a live issue in a recession, and the decision can go either way. If you are on the receiving or the paying end of a golden handshake, we can advise you on what the likely tax treatment will be.  |
© Bayar Hughes & Co., 2010.