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HMRC internal manual

Employment Income Manual

Termination payments and benefits: example: Section 401 ITEPA 2003: year of assessment for payments and benefits received on or after 6 April 1998

Section 401 ITEPA 2003

An employment is terminated on 1 July 2003. The agreement provides for five payments commencing on 1 July 2004 and annually thereafter.

All the payments are received on or after 6 April 1998 (see EIM13110) and so are assessed in the tax year in which the receipt takes place, as follows:

### Date received ### Year of assessment
1 July 2004 2004/05
1 July 2005 2005/06
1 July 2006 2006/07
1 July 2007 2007/08
1 July 2008 2008/09

The £30,000 threshold (see EIM13520) is applied to each payment in turn until it is used up.

Note: all payments and benefits within Section 401 ITEPA 2003 are dealt with in the same way, whatever the nature of the event giving rise to them. So a change payment (see EIM13010) follows the same rules as a termination payment.

For payments and benefits received before 6 April 1998, see SE13926, SE13928 and SE13930.