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...

Termination payments—UK tax treatment under ITEPA 2003 Part 6 Chapter 3: £30,000 exemption, PENP, valuation, PAYE and NICs

Published by a LexisNexis Tax expert

Practice notes

Practice Note: Termination payments taxed as Earnings

The starting point for any termination payment or benefit is to determine whether, on basic principles, it is chargeable as earnings or an emolument of an office or employment under section 62 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). That issue must be decided before looking at any other charging provisions. For the principles to apply when deciding if a payment linked to the termination of an office or employment is taxable as earnings (or emoluments) under ITEPA 2003, s 62, see Practice Note: Termination payments taxed as earnings. This Practice Note concentrates on the specific deeming rules in ITEPA 2003, Part 6, Chapter 3, which subject to income tax payments and benefits on the termination of, or a change in the duties or functions of, an office or employment that are not otherwise chargeable. Those provisions also contain a number of exemptions and reliefs as outlined below, including an exemption for the first £30,000. This Practice Note also briefly considers ITEPA 2003, ss 402–404, which effectively make non-contractual payments in lieu of Notice (PILONs) wholly taxable as earnings and prevent them from benefiting from the £30,000 exemption...

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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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