Sections 62 and 401 ITEPA 2003

Payments of compensation for loss of office are chargeable under section 401 ITEPA 2003 (see EIM12852), not section 62 ITEPA 2003 (see EIM00515). However, that label can be applied to a payment when it's not appropriate: see EIM13005.

Because payments and benefits chargeable under section 401 ITEPA 2003 may qualify for various reliefs (see EIM13500), it's important to recognise the principles that determine which section applies.

Section 401 applies where an employee receives a payment as compensation for cancellation of a contract, as opposed to receiving something to which contractual terms give entitlement. The former could be:

Need help? Get subscribed!

To subscribe to this content, simply call 0800 231 5199

We can create a package that’s catered to your individual needs.

Or book a demo to see this product in action.