Employers and employees should consider the tax implications before waiving salaries and bonuses, as David Baxter (Stephenson Harwood) explains.
As the economic effects of Covid-19 continue and companies across all sectors and markets look to manage cashflow a number of company directors and employees in the UK have voluntarily agreed to reduce their salary or waive bonus or both. However despite these good intentions income tax and NICs may in certain circumstances still be due and accountable for on the amount of salary and bonus which has been waived.
This article considers how directors and employees who are resident for tax purposes in the UK at all material times may voluntarily waive a proportion of cash earnings (e.g. salary bonus or fees) due under a service or employment contract without also triggering an income tax and...
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Employers and employees should consider the tax implications before waiving salaries and bonuses, as David Baxter (Stephenson Harwood) explains.
As the economic effects of Covid-19 continue and companies across all sectors and markets look to manage cashflow a number of company directors and employees in the UK have voluntarily agreed to reduce their salary or waive bonus or both. However despite these good intentions income tax and NICs may in certain circumstances still be due and accountable for on the amount of salary and bonus which has been waived.
This article considers how directors and employees who are resident for tax purposes in the UK at all material times may voluntarily waive a proportion of cash earnings (e.g. salary bonus or fees) due under a service or employment contract without also triggering an income tax and...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
