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
- different offices or employments with the same employer
- 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.