Our December ebulletin noted the HMRC's intention to change PAYE regulations and require employers from 6 April 2011 to apply the usual basic, higher and additional tax rates (without taking personal allowances into account) to post-P45 payments. The draft regulations are still not available, but the latest information suggests that the bands will be applied on a non-cumulative basis, so that the amount by which the payment exceeds £12,500 would be taxed at 50%. The employee would then need to reclaim any tax overpaid.
Employers currently negotiating compromise agreements should ensure they do not contain any contractual promise only to deduct at basic rate.
Key contacts
Samantha Brown
Managing Partner, Employment, Pensions and Incentives, UK and EMEA, London
Steve Bell
Managing Partner, Employment, Industrial Relations and Safety, Asia and Australia, Melbourne
Emma Rohsler
Partner, Head of Employment, Pensions and Incentives, EMEA, Paris
Tim Leaver
Partner, London
Andrew Taggart
Partner, London
Fatim Jumabhoy
Partner, Head of Employment & Workplace Investigations, Asia, Singapore
Barbara Roth
Partner, New York
Christine Young
Partner, London
Disclaimer
The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.