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Are you correctly taxing termination payments to employees for disability?

Corporate | 10/07/2023

Termination payments made to employees on account of disability are completely free of tax and National Insurance contributions (NICs). They are not subject to the £30,000 cap that normally applies to tax-free termination payments.

HMRC's restrictive interpretation of what qualifies as a disability payment has been successfully challenged in a recent case.

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Corporate Employee Incentives Employment, Pensions and Immigration

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Stretch Nicholas

Nicholas Stretch

Partner

London

De Lima Desiree

Desiree De Lima

Associate

London

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