Tax warning on termination pay
Taxman set to take a closer interest at termination payments as redundancy programmes soar, says KPMG
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.