Inland Revenue -
Employer's Further Guide to PAYE and NICs |
Type of payment | Include in gross pay for | |
NICs purposes? | PAYE purposes? | |
1 Payment made under terms and conditions of employment – unless the payment is listed separately later in this chart ‘Terms or conditions’ means anything governing the employment relationship so, as well as any written contract, verbal terms, Handbooks and Agreements may well be included. |
Yes | Yes |
For example
If it is your normal practice to make a payment on termination, it should be treated in the same way as one made under terms or conditions (even if there is no legal obligation to pay it). |
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Yes | Yes |
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Yes | Yes |
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See 7 | see 7 |
Redundancy payments are dealt with at 6 below |
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2 Lump sums paid on retirement or death from
| No | No |
3 Other lump sums paid on retirement |
Include only earnings received from the employment. Pension payments are not included |
Yes in full but see paragraph 151 |
4 Other lump sums paid on the death of an employee |
No | Yes in full but see paragraph 151 |
5 Lump
sums to compensate for loss of employment through disability,
injury, or ill health which prevents |
No | No |
6 Payments for redundancy
| No | On amounts over £ 30,000 only. See also paragraphs 148 and 152 |
7 Payments made as damages The termination was a breach of contract. For example,
| No | On amounts over £ 30,000 only. See also paragraphs 148 and 152 |
8 Payments for the employee giving a restrictive covenant
employee’s conduct. | Yes | Yes |
9 Employee’s legal costs
for loss of employment. | No | May be tax free, ask your Inland Revenue office about Extra Statutory Concession A81 |
10 Cost of ‘outplacement counselling’
|
No | No |
11 Cost of retraining courses
course expenses for an employee who is about to leave, or who has recently left your employment. The course must be | No | No |
12 Pension |
No | No |
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