Income Tax (Trading and Other Income) Act 2005 section 76

Redundancy payments and approved contractual payments

Section 76 sets out the conditions under which an employer may obtain a tax deduction for statutory redundancy payments and approved contractual payments made to employees, and defines the key terms used in sections 77 to 80.

• The rules apply when an employer makes a redundancy payment or an approved contractual payment to an employee whose employment is wholly or partly in the employer's trade.
• A "redundancy payment" means a statutory redundancy payment under Part 11 of the Employment Rights Act 1996 or the equivalent Northern Ireland legislation.
• A "contractual payment" is an amount the employer is contractually obliged to pay on termination of employment, and it is "approved" if the relevant agreement is subject to an order under section 157 of the Employment Rights Act 1996 or the Northern Ireland equivalent.
• Where the employee works partly in the employer's trade and partly in other capacities, the provisions still apply, with the deduction apportioned under the rules in sections 77 to 79.