Termination payments and benefits: Section 401 ITEPA 2003: exceptions: payments on account of injury or disability: interaction with capital gains tax
Section 406(b) ITEPA 2003
A taxpayer who claims exception on disability grounds in respect of a terminationpayment within Section 401 ITEPA 2003 may claim ill-health retirement relief for capitalgains tax purposes until 2002/03.
This could happen, for example, if an individual who is a full time working officer oremployee of his or her personal company retires early on ill-health grounds and at thesame time sells shares in the company.
The capital gains tax claim is referred to the HMRC’s Medical Adviser (see CG63400+). Ifthe taxpayer’s claim to that relief is accepted you may also accept that the paymentqualifies for exception from a Section 401 ITEPA 2003 charge under EIM13610.