Despite a recent discussion draft from the OECD, the difficulties of characterisation of termination payments paid to internationally mobile employees are likely to continue, James Hill explains.
Identifying the correct tax treatment of a termination payment can be fiddly even in a purely UK context. However where an employee has spent time working in the UK and working outside the UK for an employer there is another layer of complexity. The first step as always is to analyse what the termination payment is actually for since only then can an employer/employee determine as far as the UK is concerned which part of ITEPA 2003 applies to the termination payment. If the termination payment falls within ITEPA 2003 Part 6 Chapter 3 (payments and benefits on termination of employment etc) it is then necessary to apply Chapter 3’s particular ‘residence’ rule: the...
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Despite a recent discussion draft from the OECD, the difficulties of characterisation of termination payments paid to internationally mobile employees are likely to continue, James Hill explains.
Identifying the correct tax treatment of a termination payment can be fiddly even in a purely UK context. However where an employee has spent time working in the UK and working outside the UK for an employer there is another layer of complexity. The first step as always is to analyse what the termination payment is actually for since only then can an employer/employee determine as far as the UK is concerned which part of ITEPA 2003 applies to the termination payment. If the termination payment falls within ITEPA 2003 Part 6 Chapter 3 (payments and benefits on termination of employment etc) it is then necessary to apply Chapter 3’s particular ‘residence’ rule: the...
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If you do not subscribe but are a registered user, please enter your details in the following boxes:
