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HMRC internal manual

Tax Credits Technical Manual

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HM Revenue & Customs
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Income: Employment income rules: Any amount chargeable to income tax under Chapter 3 of Part 6 of the ITEPA 2003

The Tax Credits (Definition and Calculation of Income) Regulations 2002, Reg. 4(1)(f)

These are payments or other benefits in connection with the termination of a person’s employment, a change in the duties of a person’s employment or a change in the earnings from a person’s employment. It does not matter whether the payment was received by the person, their spouse, blood relative, dependant or personal representative.

Examples are; statutory redundancy pay and compensation payments for wrongful or unfair dismissal.

The amount to include as income is the amount in excess of £30,000.

This is the income tax provision. See Employment Income Manual paras EIM13760 (redundancy) and EIM12950-12970 (compensation) for further details. All payments within Chapter 3 of Part 6 of ITEPA, to the extent that they are taxable, count as income from employment for tax credit purposes.