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Saying goodbye can be difficult

AT times, some business owners have to make hard decision to say goodbye to their very hard-working employees (or not so hardworking ones).This is a very difficult time for both parties and getting the termination payment right is very important.

This month I want to highlight the changes that the HMRC plans to put in place from April 2018 to ensure that when employees have to say goodbye to your business, their final payment is adequately taxed.

Termination payment is usually fully taxed when it is a reward for service performed, contractual or expected from the employer. However, termination payment such as compensation for loss of office and redundancy payment also referred to as ex-gratia is only taxable to the extent that they exceed £30,000.