How much tax should employers deduct from termination payments? HMRC have announced a change to the way that lump sum termination payments have to be taxed by employers from this coming April.
As is well known, the first £30,000 of a compensation payment can be paid free of income tax and national insurance contributions, provided that it is paid as compensation for “loss of office” or employment. This commonly applies on redundancy, but can apply in other situations too.