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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Termination payments and benefits: example: payments or benefits provided on behalf of the employee or to the employee's order

Section 401(4) ITEPA 2003As in

EIM13916, an employer agrees to pay £10,000 to the employee’s golf club, securing lifetime membership and other benefits, as part of a settlement on termination of employment.

The golf club is not within the class of recipients covered by Section 401 ITEPA 2003 (see EIM13020), the payment is not received by the spouse or any blood relative or dependant of the employee nor the employee’s personal representatives.

Nevertheless, the payment is within Section 401 ITEPA 2003.

The reason is that the Section includes any payment made on behalf of, or to the order of, the employee. In reaching the agreement with the employer, the employee has ensured that the golf club will receive the payment to the order of the employee. It is then treated as received by the employee for the purposes of the section.