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Q&As

Does the £30,000 tax exemption for termination payments apply where a person’s office as a director is terminated, but where their employment continues?

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Published by a ��Ӱ�� Employment expert

Published on: 02 May 2019

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Where a compensatory payment for Loss of office or employment is made in circumstances where:

•
the payment is not taxable as:
1. ◦
  Earnings under section 62 of the Income Tax (Earnings and Pensions) ACT 2003 (ITEPA 2003) (for more information, see Practice Note: Termination payments taxed as earnings)
2. ◦
  benefits-in-kind (for more information, see Practice Note: How employment income is taxed—non-cash earnings or benefits)
3. ◦
  benefits from an employer-financed retirement benefits scheme ((for more information, see: Employer-financed retirement benefits scheme: Tolley’s Income Tax 2018–19 [56.35]–[56.39])
4. ◦
  employment-related securities (for more information, see: Employment-related securities—overview)
5. ◦
  disguised remuneration, if the payments or benefits on termination are provided by a third party (such as an employee benefit trust) rather than the employer itself (for more information, see: Disguised remuneration and EBTs—overview), or
6. ◦
  restrictive undertakings (Practice Note: Taxation of payments for restrictive covenants or undertakings), and
•
for terminations for loss of office

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Jurisdiction(s):

United Kingdom

Key definition:

Director definition

What does Director mean?

An officer of the company, usually registered as such at companies house, but may be also be a shadow or de facto director.

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