EIM12810 - Termination payments and benefits: introduction: applying the legislation
Sections 62, 225, 393 and 401 ITEPA 2003
Having found what each element of a termination package is for
(see
EIM12805), each element should then be
looked at separately.
Note that there is a self-contained set of
statutory rules to deal with receipts from non- approved and
employer-financed retirement benefits schemes. Guidance on this is
at
EIM15010 onwards. If those rules apply,
you need not consider the Sections below.
- First, consider Section 62 ITEPA 2003: is the payment or benefit earnings from the employment? See EIM12850 for the more common termination payments that are within Section 62. Material on earnings generally is at EIM00600 and subsequent instructions, particularly EIM00530 regarding non-money receipts. If not,
- second, consider Section 225 ITEPA 2003: is the payment or benefit for a restrictive covenant? See EIM03600 onwards. If not,
- last, consider Section 401 ITEPA 2003: is the payment or benefit made in connection with termination? See EIM12850 onwards. Note: it is common for benefits (such as use of a car or medical insurance) to continue through the termination of the employment. See EIM12815 for details of how these are taxed.
There is a typical example of this process at
EIM13900.
Note that:
