Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

ACT definition

What does ACT mean? In corporate and banking practice, ACT usually refers to the Association of Corporate Treasurers, the UK-based professional body for corporate treasury professionals, rather than a statutory “Act”. It is not defined in legislation or case law; the acronym is market terminology used in transaction documents and governance materials. The Association of Corporate Treasurers promotes professional standards in liquidity management, funding, cash and risk management, foreign exchange and derivatives. It publishes guidance and a code of ethics and awards recognised qualifications (including AMCT and FCT). In legal contexts, references to “ACT-qualified” personnel or to ACT good practice may appear in treasury policies,...

Termination payments: UK exemptions and reliefs under ITEPA 2003, including £30,000 limit, pensions, foreign service, death, disability, injury to feelings and NICs

Published by a LexisNexis Tax expert

Practice notes

Certain sums paid when an employment or office ends can be received free of tax. In prACTice, many of these reliefs are easily overlooked. A termination payment may escape tax because it fits within the £30,000 exemption, because the whole amount is specifically relieved by statute, or because it is not regarded as employment income at all.

These reliefs apply only to payments that would otherwise be taxable as termination payments within section 401 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). They do not extend to amounts chargeable under other provisions as earnings, benefits, payments for Restrictive covenants, or sums from an employer financed retirement benefits scheme, as those other charging rules (ITEPA 2003, ss 62, 63–214, 225 and 394) take precedence—see Practice Note: Termination payments and tax. Those statutory charging rules in ITEPA 2003, ss 62, 63–214, 225 and 394 override any relief for termination payments. Any termination payment within one of those alternative charging provisions remains taxable. This Practice Note deals solely with termination payments that fall within ITEPA 2003, s 401.

£30,000 exemption

There is a specific exemption available against certain termination payments taxable under ITEPA 2003, Pt 6, Ch 3...

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Sam Whitaker

Debevoise & Plimpton LLP

Sam is an International Counsel in the London office of Debevoise & Plimpton LLP. He provides the full range of employment and benefits advice on transactions and stand-alone employment matters. He has substantial experience of advising on the employment and benefits aspects of various transactions, including UK listings, share and asset acquisitions and disposals (both UK-based and multi-jurisdictional transactions), joint ventures and other transactions. He provides the full range of stand-alone employment advice including the implementation of employment and benefit arrangements for senior executives, implementing executive severance arrangements, managing UK and international redundancy exercises and related consultation requirements, the establishment of share incentive and bonus plans, employment litigation involving restrictive covenants, unfair and wrongful dismissal and discrimination issues. He also advises on compliance with regulatory requirements on remuneration, in particular the FCA/PRA’s Remuneration Codes and, at a European level, CRDV....

Web page updated on 22/05/2026

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