Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Earnings definition

What does Earnings mean? In corporate and finance practice, earnings means the profit attributable to ordinary shareholders for a reporting period. It is the company’s profit after tax, after finance costs (including interest paid to bondholders) and after any preference dividends. Earnings are commonly shown on a per‑share basis as earnings per share (EPS): profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the period. Example: £2 million earnings and 10 million shares gives EPS of 20p. Earnings is a descriptive accounting and market term, not a statutory one. For listed companies in the...

PILONs and PENP taxation post‑April 2018: PENP formula, RTA scope, notice period traps, allowances, non‑resident rules and practitioner action points

Published by a LexisNexis Tax expert

Practice notes

The tax treatment of payments in lieu of notice (PILONs)

Significant changes to sections 402–404 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) took effect on 6 April 2018. In essence, every PILON—whether made under an express or implied contractual PILON clause or made without any such provision—is now fully taxable and liable to both employee and employer National insurance contributions (NICs). This position is delivered through a requirement for employers to perform a post-employment notice pay (PENP) calculation. As set out below, that calculation enables employers to determine which portion of a termination payment falls within the tax charge. Consequently, the pre‑2018 distinction between PILONs paid under a contractual PILON clause (previously wholly taxable) and PILONs not paid under a contractual provision (which could access the £30,000 tax exemption and were entirely outside NICs) no longer applies, save for identifying the specific charging provision within ITEPA 2003 under which the taxable PILON is brought into charge. In addition, with effect from 6 April 2020, an employer Class 1A...

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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 21/05/2026

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