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Termination payments

One of my samll company clients has posed a question redundancy payments, and making different redundancy payments to employees. If a company chooses to make redundancy payments to employees on a completely discretionary basis above the £30k tax-free threshold (I.e. All employees on the same salary but some receive larger payments), is there a precedent in tax law that ensures this is still as a result of the termination and not in any way linked to the employment (I.e. Subject to S401 and not S62 of ITEPA)? 

Thanks for any advice.


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27th Apr 2012 14:21


There is nothing in law to stop different payments to different employees. Whether a payment is a genuine termination payment and therefore eligible for the £30k exemption depends on the facts and the answer could be different for two employees receiving payments at the same time.

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