Cash payments to ex employees

Cash payments to ex employees

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Owner of company sells his business, in which he is subsequently an employee of the new owners. After the sale, he gives cash payments totalling tens of tousands of pounds to some of his former employees (now employees of the new company), from his own taxed income.

Assuming that the payments are taxable, as they have been made due to the recipients' employment, how should the payments be declared (as he is no longer their employer), and is there any way he can obtain tax relief for the payments?
Anon

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By thehaggis
17th May 2008 19:09

Why is it taxable?

The nature of the payment will determine if it is taxable or not. If it is simply a gift as a mark of appreciation, it may not be taxable. There are a few tax cases kicking around supporting this view

If it is taxable, the recipients will need to declare it. I doubt that a PAYE responsibility could be attached to the company. I cannot think of any reason why the donor should receive tax relief for the gifts.

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