Termination packages often include both cash and non-cash payments. See the Taxation of cash employment termination payments guidance note for information on the taxation of cash payments.

Subject to reliefs and exemptions, non-cash benefits provided on or after termination are taxed under ITEPA 2003, s 401. Any taxable benefits arising before termination are taxed under the benefits code.

It is common for non-cash benefits provided to employees during employment to continue beyond the date of termination. Benefits that straddle the termination are apportioned on a time basis, those falling after termination being taxed under ITEPA 2003, s 401 and those before taxed under the benefits code.

Non-cash benefits are valued on the cash equivalent of the benefit.

The cash equivalent is the greater of:

1. •

   the amount that would be chargeable under ITEPA 2003, s 62 if the benefit were earnings. The amount is based on ‘money’s worth’ and will be its direct monetary value or the value it is capable of being turned into ― the second-hand value.

2. •

   the cash equivalent