Introduction to this document

Termination payment minutes

You can use company law formalities to support your case that a termination payment is not ordinary earnings and hence not taxable (up to a £30,000 limit). What’s involved?

Ex gratia minutes

If possible, agreement to make a termination payment, and its approval by the board using Termination Payment Minutes, should be made after employment ceases. Where this is not practicable, any reference in any minute or document should be as brief as possible and refer to the payment only as being “ex gratia”. Don’t refer to it as “consideration for past services” as this will almost certainly make it taxable.