Gardening leave meaning

Depending on the facts, a sum paid or a benefit given on the termination of an office or employment can be taxed in full, taxed in part, or, in limited cases, be wholly exempt. For a summary of the potential tax treatments of termination payments, see Practice Note: Termination payments and tax. The starting point for any termination sum is to consider whether it is chargeable, on basic principles, as earnings from, or an emolument of, an office or employment under section 62 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) or instead falls within other provisions of ITEPA 2003 that deem specified categories of termination payments to be earnings. For instance, since 6 April 2018, ITEPA 2003, s 402B has treated non-contractual payments in lieu of notice (PILONs) as earnings for tax purposes under UK law...

ARCHIVED : This Archived Practice Note sets out the pre‑6 April 2018 tax treatment of payments in lieu of notice. For the tax position applying to such payments where employment ends on or after 6 April 2018, see Practice Note: Taxation of payments in lieu of notice (PILONs) and post‑employment notice pay (PENP). Historically, the tax (and National Insurance contributions (NICs)) treatment of payments in lieu of notice (PILONs) has been a particularly intricate area. These are payments made in place of the amounts due for an employee’s or a director’s period of notice. Because of the complexity and the resulting uncertainty, the tax treatment of PILONs changed fundamentally from 6 April 2018. In broad terms, from that date all PILONs, whether paid under an implied or express contractual PILON provision, or not, are fully taxable and subject to employer's NICs...