SE12815 - Termination payments and benefits: interaction with benefits received during employment

Section 148 ICTA 1988 and Part V ICTA 1988

It is common for benefits provided to employees during employment to continue beyond the date of termination, usually by a specific agreement made at the time. For example, an employee provided with private use of a car may, as part of the termination package, continue to use it for a specified period following the termination.

The resulting interactions between provisions applying to employees and Section 148 ICTA 1988 can be complex, but as a matter of practice benefits which straddle the termination should be apportioned on a time basis, those falling after termination being taxed under Section 148 ICTA 1988 and calculated following SE13270. There are examples of this at example SE13905 and example SE13906.

For living accommodation, calculate the charge following SE13330 and then apportion on a time basis. For example, if in the year of termination the property is provided for 3 months in the tax year following termination, 3/12 of the charge calculated under SE13330 onwards should be included in Section 148 ICTA 1988.

Note that Section 148 ICTA 1988 applies to all employees. As such it is wider in scope than Chapter II Part V which applies to directors and employees with emoluments of £8500 per year or more (see SE20001). There may therefore be a charge under Section 148 ICTA 1988 where none existed under that Chapter.