Airline pilot termination payment

Airline pilot termination payment

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UK resident airline pilot employed by Hong Kong based airline received six-figure termination payment following cessation of employment due to ill health and withdrawal of pilot's licence.

Origin of the payment was regular employer's contributions (15% of salary) paid into unit investment fund ('benefits scheme'). All pilots employed by the airline are entitled to similar termination payment on leaving the airline's employment, generically viewed by the pilots as their 'pension payment'.  In this particular case the ex-pilot received 90% of the value of the vested funds. Would have received a greater percentage if had reached 10-year anniversary before leaving. 

The whole payment was made to ex-pilot as a cash payment which he used to pay off his UK mortgage.

Is there any way in which any part of this termination payment can be excluded from UK tax charge.

  

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By George Attazder
09th Feb 2012 22:19

Sounds like...

... an auto-pilot.

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By Biotech Guy
10th Feb 2012 09:30

NI and tax treatment of financial rewards from a former employer

Last year I left my former employer (a biotech company) and subsequently started receiving a company pension due to ill-health. The biotech company has a scheme to reward inventors, should their inventorship lead to the clinical approval and sale of an invented drug (developed in collaboration with a large pharmaceutical company), for which the biotech company receives royalty revenue. A typical time-frame for this process (from lab bench to approved drug) is 15-20 years. Now, whilst I have already received a couple of annual payments for my inventorship (which was taxed as income and Class 1, category D for NI) I wonder that now I have retired whether future awards from the biotech company should be taxed and, in particular, treated in the same way with respect to the class and category of NI contributions?  Thanks

 

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