Termination payments
Information to confirm that benefits provided as part of a termination payment do not have to be payrolled.
A termination payment is a payment or benefit provided to an employee because their employment has ended, or is ending.
Termination packages can include many different elements such as:
- compensation for loss of office
- continued provision of a company car or medical insurance as part of an exit package
- other benefits given because employment has ended
Benefits that have been provided as part of a termination payment do not have to be payrolled and are out of scope of mandatory payrolling of benefits in kind.
This is because there are no subsequent payments of money to deduct the tax from, and there is an existing reporting process for termination payments.