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Written in stone

01 December 2015 / David Reade
Issue: 4529 / Categories: Comment & Analysis , Policy

Simplifying the tax and National Insurance treatment of termination payments may hold complications for employers and employees who firmly believe in the right to exemption.


  • Most employees are certain of their entitlement to a £30 000 exemption for termination payments.
  • Proposal to abolish the £30 000 tax relief and introduce a relief based on years of service.
  • The value of the exemption has been eroded by inflation and should now be about £70 000.
  • Proposals that the relief should not apply to resignations and those working under fixed-term contracts.
  • The exemptions for injury disability legal costs and others should be retained. 


Employment lawyers will say that the one piece of tax law is engraved on every departing employee’s heart is a belief in their entitlement to a termination payment of up to £30 000 tax free. The position is of course not that straightforward and the...

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