Income and Corporation Taxes Act 1988

579 Statutory redundancy payments. U.K.

M1 (1) Any redundancy payment, and the corresponding amount of any other employer’s payment, shall be exempt from income tax under Schedule E.

(2) Where a redundancy payment or other employer’s payment is made in respect of employment wholly in a trade, profession or vocation carried on by the employer, and within the charge to tax, the amount of the redundancy payment or the corresponding amount of the other employer’s payment shall (if not otherwise so allowable) be allowable as a deduction in computing for the purposes of Schedule D the [F1 profits] or losses of the trade, profession or vocation, but—

(a) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) if the employer’s payment was made after the discontinuance of the trade, profession or vocation the F3 . . . amount so deductible shall be treated as if it were a payment made on the last day on which the trade, profession or vocation was carried on.

(3) Where a redundancy payment or other employer’s payment is made in respect of employment wholly in a business carried on by the employer and expenses of management of the business are eligible for relief under section 75 or 76—

(a) the amount [F4 of the redundancy payment or the corresponding amount of the other employer’s payment] shall (if not otherwise so allowable) be allowable as expenses of management eligible for relief under that section, and

(b) if the employer’s payment was made after the discontinuance of the business the F5 . . . amount so allowable shall be treated as if it were expenses of management incurred on the last day on which the business was carried on.

(4) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Relief shall not be given under [F7 subsections (2) and (3)] above, or otherwise, more than once in respect of any employer’s payment, and if the employee was being employed in such a way that different parts of his remuneration fell for tax purposes to be treated in different ways—

(a) the amount [F8 of the redundancy payment or the corresponding amount of the other employer’s payment] shall be apportioned to the different capacities in which the employee was employed; and

(b) [F7 subsections (2) and (3)] above shall apply separately to the employment in those capacities, and by reference to the apportioned part of that amount, instead of by reference to the full amount of the employer’s payment F9 . . . .

(6) Where the Minister pays a sum under [F10 section 166 of the Employment Rights Act 1996] or [F11 Article 201 of the Employment Rights (Northern Ireland) Order 1996] in respect of an employer’s payment this section shall apply as if—

(a) that sum had been paid on account of that redundancy or other employer’s payment, and

(b) so far as the employer has reimbursed the Minister, it had been so paid by the employer.

Textual Amendments

F1 Words in s. 579(2) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a), Sch. 7 para. 1

F2 S. 579(2)(a) repealed (22.8.1996) by Employment Rights Act 1996 (c. 18), s. 243, Sch. 3 Pt. 1

F3 Word in s. 579(2)(b) repealed (22.8.1996) by Employment Rights Act 1996 (c. 18), s. 243, Sch. 3 Pt. 1

F4 Words in s. 579(3)(a) substituted (22.8.1996) by Employment Rights Act 1996 (c. 18), s. 243, Sch. 1 para. 35(2)(a)

F5 Word in s. 579(3)(b) repealed (22.8.1996) by Employment Rights Act 1996 (c. 18), s. 243, Sch. 3 Pt. 1

F6 S. 579(4) repealed (with effect in accordance with s. 38(2)(3) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 5 para. 43, Sch. 27 Pt. 3(4), Note (with Sch. 5 para. 73)

F7 Words in s. 579(5) substituted (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 5 para. 43 (with Sch. 5 para. 73)

F8 Words in s. 579(5)(a) substituted (22.8.1996) by Employment Rights Act 1996 (c. 18), s. 243, Sch. 1 para. 35(2)(a)

F9 Words in s. 579(5)(b) repealed (22.8.1996) by Employment Rights Act 1996 (c. 18), s. 243, Sch. 3 Pt. 1

F10 Words in s. 579(6) substituted (22.8.1996) by Employment Rights Act 1996 (c. 18), s. 243, Sch. 1 para. 35(2)(b)

F11 Words in s. 579(6) substituted (24.9.1996) by The Employment Rights (Northern Ireland) Order 1996 (S.I. 1996/1919 (N.I. 16)), arts. 1(2), 255, Sch. 1 (with Sch. 2 para. 1)

Modifications etc. (not altering text)

C1 S. 579 modified (with effect in accordance with s. 39(3)-(5) of the modifying Act) by Finance Act 1995 (c. 4), Sch. 6 para. 23

Marginal Citations

M1 Source-1970 s.412(1)-(6)