How to Stay Safe from HMRC
HMRC specifically target termination payments for review as most employers do not consider the tax & NIC implications surrounding redundancy payments. There is a popular misconception that the first £30,000 of any termination payment is automatically tax & NIC free. There are many reasons why an employee leaves a business, including redundancy, health issues, early retirement etc. each with its own tax & NIC implications. Issues also commonly arise on the taxation of Payments in Lieu of Notice (PILONs), Restrictive Covenants, and ‘terminal bonuses’, which may be agreed as part of a Compromise Agreement reached where an employee leaves or is being dismissed.
emTax consultants can review or draft your redundancy policies to maximise tax efficiencies and obtain clearance from HMRC on the tax position before any payments are made. Our approach results in considerable savings to both the employer and any affected employees.
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