Tax - Termination payments

canal legal has recently (April 2006) obtained a potentially significant ruling from Revenue on the liability to tax of payments made at the time of termination of employment.

Our client was a higher rate taxpayer who received payments totalling £38,000 upon his leaving employment. Revenue conceded that part of the payment was taxable but exempt as a "golden handshake" and that the balance of the payment was not subject to tax. The consequence is that the whole of the payment was received tax free. The saving in tax to our client was over £15,000 and his employer also escaped liability to National Insurance Contributions.

David Harlock, the proprietor of canal legal, commented

"This is an important concession by Revenue for employees whose employment has or is about to be terminated and also for their employers. It opens up the potential for much greater tax savings than has been considered possible.

"We were able to work the concession by deploying arguments that a number of recent tax cases have opened up. So far as we are aware, these arguments have not been used by anyone else, so canal legal is uniquely placed to deploy them."

David added that "The recent tax cases which opened up the arguments include EMI v Coldicott and Richardson v Delaney. These cases are generally considered to have narrowed the ambit for tax relief, so Revenue's concession is quite remarkable."

Please contact David if you would like to learn more about these potential tax savings.