Tag: 松江大学城600一次

Employers hit wall on using ‘golden handshake’ provision

first_imgEmployers hit wall on using ‘golden handshake’ provisionOn 1 Mar 2003 in Personnel Today Comments are closed. Related posts:No related photos. TheInland Revenue has introduced new rules that will make it far harder foremployers to avoid tax and national insurance on severance payments.Ithas been possible to make severance payments tax free – usually up to £30,000 –by using the ‘golden handshake’ provisions in the tax legislation.Thelaw states that a severance payment made under a payment in lieu of notice(Pilon) clause will be taxable and subject to national insurance contributions(NIC). Wherethere is no clause or the employer chooses to breach the contract and paydamages, it has been common practice to claim the golden handshake provisionsapply and that no NIC is payable.However,the IR’s new Statement of Practice on the tax treatment of severance paymentssays it will now presume tax and NIC are due whenever a Pilon is made “as anautomatic response to a termination”, even where the employer intends toterminate the contract in breach and pay damages.Ineffect, where there is evidence of a ‘practice’ of making Pilons without givingit much thought, they will be treated as taxable.Thenew regime is likely to lead to disputes between the IR and employers whoassume their severance payments fall within the golden handshake regime. Previous Article Next Articlelast_img read more