Are leavers payments from sale of Post Office taxable on the sub-post master or is it sale of the business ie assets and goodwill?

Are leavers payments from sale of Post Office...

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I have a sub post master who has decided to leave the post office and take the leavers payment/compensation offered.

However how do I treat this income?  Is it a leavers payment for an employee or money from sale of the business of assets and goodwill?

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By jndavs
06th Oct 2014 12:26

What exactly is happening?

Sub post offices are often operated from private property and have some sort of convenience store trading along side. Is the sub postmaster selling up or just ceasing to act for the PO?

If it is just an employment coming to an end, the usual termination payment rules apply.

The sub postmaster can probably take up to £30K tax free as the termination payment is usually non-contractual. The sale of the business will be a separate issue.

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Replying to AshBavalia:
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By ctesipon
12th Dec 2015 16:56

how to treat termination payments?

 

thanks for your valuable comments. your help is required a bit further.

my client received £60K from Post office as compensation.(he does not get usual salary but get commission instead)

if I treat it as termination income. where in tax return do I need to mention it?

i.e £60K -£30= £30K where to show? do I need to show full amount £60K or just the end figure £30k.

 

 

Many thanks

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RLI
By lionofludesch
06th Oct 2014 12:41

Depends

Agree with jndavs.  It depends on the circumstances but, almost certainly, what's to be treated as employment income and the tax free exemption, will be made crystal clear by the documentation from the Post Office.

More information needed if you're after a more detailed reply.

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By karl rhodes
06th Oct 2014 14:32

post office

The sub postmaster has a shop and the post office in leasehold premises.  The post office counter and related services are to be moved next door with in a shop/off licence that is open 7 days a week.

The post office have given them the option to leave with compensation if a suitable host is found (the shop next door).  Compensation is 26 months worth of remuneration based on best of last 3 years subject to a cap of £200,000. 

The sub postmaster bought the business at a cost of assets and goodwill.  So my question is what is the compensation for?  Is it for the sale of the business or termination of employment? 

The documentation from the post office just mentions a leavers payment.

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Replying to Lone_Wolf:
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By jndavs
06th Oct 2014 14:50

Compensation

The compensation is unlikely to be for the sale of the business, as this rarely has anything to do with the PO.

Compensation is usually paid when the PO has decided to close down a branch.

This sounds like the sub postmaster is resigning - a golden handshake?

If there is a contractual element - eg for finding the Sub PO a new home, the payment may well be taxable.

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By chicken farmer
06th Oct 2014 14:38

If he's only losing the PO counter

then how can the compensation be for the sale of the assets and business of the shop? It must be a termination payment as advised above.

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By Fuj
29th May 2015 13:23

post office leavers payment - network transformation *nightmare*

We have just left the post office under the network transformation program and have been given a £200,000.00 + VAT leavers payment as part of our final remuneration.  The post office was handed over to a new postmaster on the day we left, and we sold our adjoining convenience business to them.

Since we began our franchise agreement with post office our contract was always between our company and post office and not me personally, and all the remuneration payments were always made to the company and included in the company accounts and never to me personally so were never treated as a personal income.

Now i have had this payment from post office in my final remuneration and they have paid me VAT on top of the £200,000.00 yet my accountant says this must be treated as personal income.  There are currently 4 directors in the company who get equal share of all profits and monies from sale of business and final remuneration.  How can HMRC decide to treat that payment differently?  Especially if there is VAT on it?  Its all a bit contradicting.

I would be very much obliged if anyone had dealt with this before and new a way of this being treated as company income rather than personal?

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By eanotts
01st Jan 2016 16:27

Termination Payment

Hi

I was wondering if someone could help with this termination point. After reading the above I understand that I have to treat this as a redundancy payment but I would like to know the following.

The Post Office I have I bought as a partnership with my brother, when we did the business plan both me and my brother put in 50% each. Post office is aware that we both own the business 50% each and is also in the lease. My question is do we both get the £30K tax free because we are both in this business together.

Second question I assume is that the staff redundancy are also taken out tax free and given to the staff. How much redundancy can I pay them? because it is not very clear on HMRC it tells me the minimum they are entitled to put because they have been very loyal staff and worked quite hard for me I wanted to pay them extra.

 

Hope someone can help me with this.

Thanks

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