Tax Free Allowance

Changes are being proposed by HMRC to the £30k tax free allowance on termination payments. If these proposals are implemented we will end up with Employees paying more tax on their termination payments and Employers paying more Employer’s NICS on termination payments.

I would urge anyone with an interest in this topic to respond to the consultation as this valuable allowance does cushion the blow of loss of employment. It seems clear from the consultation that the powers that be at HMRC do not understand how termination payments work in practice, in particular with settlement agreements.