Income Tax (Earnings and Pensions) Act 2003 section 410

Exception for payments and benefits in respect of certain legal expenses etc. and indemnity insurance: individual deceased

Section 410 provides an exemption from the termination payments tax charge where payments or benefits relating to legal expenses or indemnity insurance are received by the personal representatives of a deceased former employee.

• Where a former employee has died, payments or benefits received by their personal representatives for covering deductible legal or indemnity costs are exempt from the termination payments tax charge
• A "deductible amount" must be paid either by the personal representatives themselves or by the former employer on behalf of the personal representatives
• The amount must be one that would have qualified as a deduction from employment earnings had the individual still been alive, paid it personally, and still held the employment
• The payment must be made within the run-off period to qualify for the exemption