EIM12852 - Termination payments and benefits: compensation for loss of office or employment

EIM13005 explains that compensation for loss of office or employment is usually within Section 401 ITEPA 2003, but that payments are sometimes given that label mistakenly.

There is no set limit in law for such compensation. However, if the payment or benefit appears to exceed what is payable as damages (see EIM13070) then the nature of the payment should be considered critically to find whether any part is in substance paid for some other reason such as:

• a terminal bonus for services
• a payment on retirement
• a contractual payment
• a restrictive covenant
• a customary payment.

See EIM12810 for the legislation to be applied.