Tax warning on termination pay
23 Oct 2008, Judith Tydd, AccountancyAge
http://www.accountancyage.com/aa/news/1753676/tax-warning-termination-pay
HM Revenue & Customs is set to crack down on misleading or inaccurate termination payments as redundancy programmes soar, according to KPMG.
John Chaplin, director of employment taxes at KPMG in the UK, said the firm had seen a high number of businesses wanting to rush through the process given the sensitive nature of redundancies.
‘I see it on a daily basis. They’re [employers] trying to get things done as quickly and painlessly as possible,’ he said.
But the taxman is set to take a closer interest, Chaplin warned.
Businesses often assume the first £30,000 is tax and NIC free and treat retention bonuses as non-taxable.
Chaplin said that while HMRC has traditionally been receptive to discussions on termination payouts, the ongoing economic downturn will lead to a crackdown in pursuing payments owed.
A HMRC spokesman said he was unable to comment on the issue.
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Visitor comments
Bah humbug
I am coming up for redundancy soon and am annoyed that the taxman is to get a slice of the incentive I am being paid to hand my job over. This may have to sustain me until I get another job. This tax is as unfair as the tax on death. The government should have no right to tax any part of a redundancy payment. It just goes to show their money grabbing nature.
Posted by: Mike, London , 23 Oct 2008 | 00:00