Income Tax (Earnings and Pensions) Act 2003 section 402C

The termination awards to which section 402B applies

Section 402C sets out how to determine which termination awards, and how much of them, are subject to the post-employment notice pay rules under section 402B, thereby being treated as taxable general earnings rather than benefiting from the £30,000 tax-free threshold.

• A "relevant termination award" excludes statutory redundancy payments and approved contractual payments up to the equivalent redundancy amount — these remain outside the section 402B charge
• Where post-employment notice pay equals or exceeds the total relevant termination awards, all of those awards are treated as general earnings under section 402B
• Where post-employment notice pay is less than the total relevant termination awards but is not nil, only a portion equal to the post-employment notice pay amount is treated as general earnings
• The definitions of "redundancy payment" and "approved contractual payment" follow those set out in section 309(4) to (6) of the same Act

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