We are still being asked about taxation of Settlement Payment or some people refer to it as Termination Payment.
The correct advice is that the first £30,000 of an employee’s Termination Payment will be paid without deduction of income tax in accordance with section 403 of the Income Tax (Earnings and Pensions) Act 2003. If an employee’s Settlement or Termination Payment is over £30,000, then your employer will make deductions of income tax at the basic rate of 20% in respect of the balance of the Termination Payment over £30,000.
RT Coopers Solicitors can advise you in this regard. Contact enquiries@rtcooperssolicitors.com for a meeting or more specialist advice. We will give you an indication of our costs.
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The employee only pays the basic rate.
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Very helpful.
Does that mean that this is the total liability for tax or if this takes the employee into a higher tax bracket does he have to pay the additional tax above the basic rate?