EIM13980 - Termination payments and benefits: example: exceptions: foreign service reduction: interaction with 拢30,000 threshold
Section 414(2) ITEPA 2003
An employee receives a termination payment within section 401 ITEPA 2003 of 拢100,000 which fails to qualify for full foreign service exception under EIM13690.
The employee is non-UK resident in the tax year the employment is terminated (2018 to 2019) and there is some foreign service during the employment, so the reduction for foreign service in EIM13700 is considered.
To calculate the foreign service reduction, the first step is find the amount of 鈥榩ost-employment notice pay鈥� and the 鈥榓mount charged to tax鈥� as follows.
| Termination payments and benefits within section 401 ITEPA 2003 | 拢100,000 |
|---|---|
| Post-employment notice pay (see EIM13874) | 拢10,000 |
| Termination awards subject to section 403 ITEPA 2003 (see EIM13874) | 拢90,000 |
| Less the 拢30,000 threshold (see EIM13505) | 拢30,000 |
| The 鈥榓mount charged to tax鈥� * | 拢60,000 |
* More accurately, the amount that would otherwise count as employment income. See EIM13700.
The 拢10,000 and 拢60,000 amounts may be eligible for reduction, as described at EIM13700 and shown in the examples at EIM13985.