Changes to Termination Payments

18 March 2011

On 6th April 2011, the Income Tax (Pay As You Earn) (Amendment) Regulations 2011 come into force.

At present, when a payment is made to a departed employee after their P45 has been produced, income tax is deducted at basic rate only (and they are responsible for any additional tax) using a ‘BR’ tax code. After 6th April 2011, tax at the full 20%, 40% or 50% rates must be deducted from post-termination payments (using the ‘0T’ tax code).

To read more about these changes, click here.