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HMRC internal manual

Employment Income Manual

Termination payments and benefits: reports by employers of payments and benefits within Section 401 ITEPA 2003: settlements made on or after 6 April 1998: general

Regulations 91-93 & 96 Income Tax (Pay As You Earn) Regulations 2003 (SI2003/2682)

These Regulations describe the reporting regime for payments and benefits within Section 401 ITEPA 2003. They apply to payments and other benefits awarded on or after 6 April 2004 but were formerly enacted in the same form with effect from 6 April 1998 in Regulation 46ZA of SI1993/774. For payments etc received before 6 April 1998 see SE13865.

Note that no report is required:

  • where the settlement is wholly cash. The normal PAYE returns will be made in respect of this and no further report is required


  • where the total value of the settlement is estimated not to exceed £30,000.

The employer or ex-employer is responsible for making this estimate, which is based on the law in existence for the year the settlement is made. This means, for example, that where the settlement includes the use of a car for 3 years from 2003/04, the estimate will include the cash equivalent of that benefit (see EIM13270) at 2003/04 rates, multiplied by 3.

But note that the ex-employee must always be taxed on the correct cash equivalent for the year the benefit is actually used or enjoyed (see EIM13110), even if that differs from the employer’s original estimate.

Where a report is required, it must be made to HMRC within 92 days after the end of a tax year (that is, on or before 6 July) and sent to The Employer Technical Team, Employer Office, BP4102, Benton Park View Newcastle NE98 1ZZ. It must be copied to the employee within the same time limit.

There is no specific form for this but EIM13850 sets out what it must contain.