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KEY POINTS

• The £30 000 exemption for termination payments would now be £71 000 if it had been increased by inflation.
• A summary of the main taxable and exempt payments on termination of employment.
• The first proposal from the OTS for reform of the tax regime on termination payments was a blanket exemption from income tax.
• The alternative proposal and simple proposal would be to make all termination payments liable to income tax and Class 1 National Insurance.
• The OTS proposes two alternative regimes involving an exemption for statutory payments and a review of other exemptions or a new limited but increased exemption.
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