How do the settlement agreement taxation changes affect me? Employment Law

The settlement agreement taxation changes introduced on 6 April 2018 mean that employers are required to tax as earnings the part of a termination payment that is equivalent to the earnings the individual would have received had their notice period been worked in full.

Previously employers had offered tax-free ‘compensation’ for not giving notice, however, HMRC has introduced Post Termination Notice Pay to ensure payment in lieu of notice and notice pay generally is subject to usual deductions.

If you have any more questions about settlement agreements, please contact us today.