Termination payments and benefits: redundancy: site agreements for short-service employees: tax treatment
| Type of payment | Tax treatment |
| ————————————————————————————————————————————————————————————————————————— | ————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————— |
| Completion bonus or time-saved payment: this is a sum paid for completing a contract before a specified date.
Payment for completing a project on time.
Retention payment: this is based on the number of hours worked. | Section 62 ITEPA 2003 (see EIM00515).
The sum is a reward for services in the form of a contractually guaranteed terminal payment (see EIM13765). | | Severance payment (excluding a statutory redundancy payment).
Usually related to length of service and paid where an employment lasts less than 2 years. | May satisfy the definition of payments for redundancy (see EIM13800) and so fall within section 401 ITEPA 2003 (see EIM13775).
Otherwise, section 62 ITEPA 2003 (see EIM00515). | | Payment in lieu of notice (PILON) | See EIM12975 and EIM13874 | | Statutory redundancy payment made under Employment Rights Act 1996 or Northern Ireland equivalent (see EIM13760) | Section 401 ITEPA 2003 (see EIM13760) |