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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Termination payments and benefits: Section 401 ITEPA 2003: £30,000 threshold: meaning of "associated" employers

Section 404(2) to (3) ITEPA 2003

This guidance explains which employers are “associated”. EIM13530 explains that payments and benefits from associated employers must be aggregated before applying the £30,000 threshold.

Employers are associated if, on a “termination or change date” (as defined inthe last bullet below):
 

  • Test A: one employer is under the control of the other – see example 1 at EIM13965, or
  • Test B: one employer is under the control of a third person who controls, or is controlled by, the other employer – see example 2 at EIM13965, or
  • Test C: on a different “termination or change date” one employer is under the control of a third person who controls, or is controlled by, the other employer – see example 3 at EIM13965

For this purpose:
 

  • “control” means the ability to exercise control over the affairs of a company, etc whether by possessing the greater part of the issued share capital or voting power, or otherwise (see EIM20213)
  • “person” (singular) is to be read as including “persons” (plural) – s6 Interpretation Act 1978 (so that, for example, Test B above is satisfied if the employers are under the control of the same persons)
  • employer and person controlling or controlled by an employer include their successors
  • “termination or change date” means the date of the termination or change giving rise to the payment or benefit being considered. For example, if you are looking at a redundancy payment made on 1 March 2004 in respect of an employment that ended on 1 January 2004, the “termination or change date” is 1 January 2004