Income Tax (Trading and Other Income) Act 2005 section 80

Payments made by the Government

Section 80 deals with the tax treatment of redundancy or approved contractual payments that are initially made by the Government on behalf of an employer, and subsequently reimbursed by that employer.

• Where an employer owes a redundancy payment or approved contractual payment, the Government may step in and pay the employee directly
• In England and Wales, the Secretary of State makes the payment under employment rights legislation; in Northern Ireland, the Department for Employment and Learning does so under the equivalent Order
• When the employer reimburses the Government for the payment, the normal trading deduction rules apply as though the employer had made the redundancy or contractual payment directly
• This ensures the employer is not denied a tax deduction simply because the payment was routed through the Government rather than paid to the employee directly