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Posted Fri, 02 Dec 2022 15:18:19 GMT by Zuio
Hi, Does the timing of ex gratia payment made for termination impacts tax treatment? Ex gratia is in addition to normal payment of salary during eight weeks notice. If payment is made just after notice is given but before termination date is it still tax free or will it be considered like income tax? Thank you
Posted Tue, 06 Dec 2022 12:17:09 GMT by HMRC Admin 19
Hi,

You can see the following guidance for details of all the conditions that must be met for an ex-gratia termination payment to be deemed to be exempt from tax, if under £30,000.                       

EIM13500 - Termination payments and benefits: section 401 ITEPA 2003: threshold, exceptions, reliefs and reduction

Thank you.

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