The tax-free amount is not part of the employee's ETP. The Inland Revenue has confirmed, in a Statement of Practice published on 31st October, 1991, its views that an "arrangement" by an employer to make ex gratia payments to an employee on his retirement (or death) constitutes a "retirement benefits scheme". If your contract provides for payment in lieu of notice, the payment is treated as pay and exemptions do not apply. So if the payment is ex gratia to the legal heirs, certainly it was not an amount due to the deceased. Circular No. HMRC's view is clear - if there was a payment… Ex Gratia Payment By Employer To Deceased’s Dependants Deductible From MACT Compensation: SC [Read Judgment] Ashok KM. Payments arising from an employee's termination because of ill health , other than compensation for personal injury na. if any of the ETP is tax-free An ETP has a tax-free component – if part of the payment is for invalidity or work done before 1 July 1983, you don't withhold tax from this component. Therefore, the normal procedure where a lump sum is to be paid to an employee on This payment may be regarded as wages or salary or as payment for loss of a job. My husband died in September 2012 while he was a director in a reputed company. A guide to the Income Tax ... payment on non-accidental death . 573, F.No. Will such amount be taxable in my hands Payment in lieu of notice. lump sum termination payments, including so-called “ex gratia ” or gratuity payments made to an employee in consequence of an “agreed resignation” or “mutually agreed termination”, are subject to income tax. Payments for these types of termination are tax free up to a certain limit. The company gave me certain amount as ex-gratia compensation. EIM15310 discusses the taxation of an ex gratia payment. An advance or loan. You don't need documents. Any tax free lump sum payments you receive are then taken from this benefit. Employee share scheme payments. Share This - x. It's hard to think of a more relevant example. It says: "an employer-financed retirement benefits scheme is created by the payment." Ex gratia payment received by a person or his heir from the Central Government/State Government/Local Authority/Public Sector Undertaking, consequent upon injury to the person/death of a family member, while on duty, is not liable to tax - Circular : No. 776, dated 8-6-1999. You don't need a pre-existing scheme. 25 Sep 2016 3:33 PM GMT. Payments for loss of future super payments na. 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