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HMRC internal manual

Employment Income Manual

Termination payments and benefits: section 401 ITEPA 2003: £30,000 threshold: payments and benefits to be aggregated

Section 403(3) and 404 ITEPA 2003

EIM13515 explains that section 403(1) ITEPA 2003 provides a £30,000 threshold for payments and benefits which are chargeable to tax as specific employment income. 

Before the £30,000 threshold (see EIM13505) is applied, it’s necessary to add together all the payments and benefits within section 401 ITEPA 2003 (excluding any amount of post-employment notice pay – see EIM13874) that are made to, or in respect of, the same person in connection with:

  • the same office or employment

and

  • different offices or employments with the same employer

and

  • different offices or employments with associated employers (see EIM13540)

The threshold is then applied to the total. This ensures that only one £30,000 threshold is applied for that total.

For example, a director is dismissed from 2 separate employments with associated employers, receiving £25,000 in each case within section 401 ITEPA 2003. The aggregated total received is £50,000 and only one £30,000 threshold is available against that total.