PAYE operation: lump sum termination payments: termination payment notification received
When you are notified of a lump sum termination payment
- Keep the notification with the individual’s records
- Where the employer has operated PAYE correctly but the PAYE system has not accounted for the correct tax due, send a letter to the individual saying that a self assessment may be necessary on his or her termination package and a balancing payment (underpayment) may arise
Your next action will depend upon when the termination payment is made and of what it comprises. One of the main actions, no matter what the circumstance, is to set the case up in SA where an assessment is necessary (for example, if the circumstances set out in PAYE74020 apply and in cases where the circumstances set out in SAM100060 apply).