Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 309: Limited exemptions for statutory redundancy payments
1282.This section provides for limited exemptions from income tax in respect of redundancy payments and approved contractual payments.
1283.Subsection (1) provides that there is no liability to income tax on redundancy payments and approved contractual payments as general earnings, except where subsection (2) applies. That subsection applies where the amount of an approved contractual payment exceeds the amount which would have been due if a redundancy payment had been payable. In such a case the excess is liable to income tax.
1284.Subsection (3) provides that there is no liability to income tax on redundancy payments and approved contractual payments as specific earnings, except under Part 6 Chapter 3 (payments and benefits on termination of employment).
1285.This section derives from parts of sections 579 and 580 of ICTA. It is drafted by reference to an “approved contractual payment” as opposed to the “corresponding amount of any other employer’s payment” – the expression used in section 579(1). The section also introduces the expression “statutory payment” to describe the sum specified in section 579(6). These new expressions should make the legislation easier to follow. They also have the consequence that it is possible to dispense with the definition of “the Minister” in section 580(1)(c).