The following Employment Tax guidance note Produced by Tolley in association with Sue El Hachmi of Osborne Clarke LLP provides comprehensive and up to date tax information covering:
An exemption from tax can apply to termination payments where the employee worked all or part of the employment period overseas (which the legislation terms ‘foreign service’, see definition below). For UK residents (with the exception of seafarers), this relief no longer applies to terminations on or after 6 April 2018, and payments made on or after 13 September 2017. There is no change in the relief in relation to change of duties or earnings.
Where an employee has worked overseas and receives a payment on termination which fails to be taxed under ITEPA 2003, s 401 (see the How could a termination payment be taxed? guidance note), that payment may either be fully exempt from tax or partially exempt.
The full exemption rules are complex. It is best, once it has been established that the individual is not resident in the UK, to work through them test by test. If any of the three tests discussed below are met, then the termination payment is completely tax-free.
See Example 1.
If an employee has been in service for 10 years, and has spent eight of those 10 years abroad, the foreign service comprises more than three-quarters of total service, so the termination payment is fully exempt so long as the employee is not resident in the UK, where the termination is, on or after 6 April 2018.
If an employee h
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Maintenance payments are payments made by a taxpayer to their former or separated spouse for the maintenance of that former spouse or their children. To obtain any tax relief for maintenance payments, one of the couple must have been born before 5 April 1935 and the payments must be made by virtue
Normal due dateSmall companies (including marginal relief companies) are required to pay all of their corporation tax ― nine months and one day ― after the end of the chargeable accounting period.For example, where a chargeable accounting period ends on 31 December 2018, the due and payable date for
From 6 April 2015, an individual can elect to transfer 10% of the personal allowance (£1,250 in 2020/21 and 2019/20) to the spouse or civil partner where neither party is a higher rate or additional rate taxpayer. The legislation calls this the ‘transferable tax allowance’ but the GOV.UK website
Class 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met before Class 1A NIC is
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.