Income Tax (Earnings and Pensions) Act 2003 section 403

Charge on payment or other benefit where threshold applies

Section 403 establishes the income tax charge on termination payments and benefits that exceed the £30,000 tax-free threshold, including how the threshold is calculated, when payments are treated as received, and who is liable for the tax.

• Termination payments and benefits are only taxed as employment income to the extent they exceed the £30,000 threshold, with the tax falling in the year the payment or benefit is received
• Cash benefits are treated as received when paid or when the recipient becomes entitled to demand payment; non-cash benefits are treated as received when used or enjoyed
• The £30,000 threshold is a cumulative limit — all qualifying payments and benefits in respect of the same employee must be aggregated, including those received in 2017-18 or earlier years that fell within this Chapter
• If the employee or former employee has died, the tax charge falls on the personal representatives and is a debt payable out of the estate