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HMRC internal manual

Employment Income Manual

Termination payments and benefits: employer's PAYE responsibilities

Section 401 ITEPA 2003

A payment within section 401 ITEPA 2003 is subject to the PAYE Regulations whether or not it is an amount chargeable to tax as specific employment income, or post-employment notice pay, which is taxable as general earnings (see EIM13874). So the payer must deduct tax if a sum is chargeable after applying the threshold, exceptions and relief (see EIM13500 and subsequent guidance).

For guidance on the PAYE position in respect of non-cash benefits, see PAYE72035.

The Employer’s Further Guide to PAYE and NICs (CWG2) tells the employer what to do.