Tax on "Discretionary Termination Payments"

edited 30 November -1 at 1:00AM in Cutting Tax
3 replies 2.9K views
Post_Office_PetePost_Office_Pete Forumite
2 Posts
edited 30 November -1 at 1:00AM in Cutting Tax
Hello everyone,

Would love some advice on this.

I bought a Post Office in 2008.

At the moment there is a Network Transformation process going on. The Post Office will pay me a "Discretionary Termination Payment" and I walk away and a new Post Office Operator is appointed.

I am not employed by the PO but have a contract to provide its services, the Inland Revenue treats Sub Postmasters as " Office Holders".

The IR want to charge income tax on the entire sum of money apart from the first £30K. It is being treated as a redundancy payment.

My accountant says that no expenditure can be charged against the discretionary payment to reduce the tax bill.

Any help/advice/info to help reduce this outrageous bill is seriously appreciated.

PO Pete


  • I came across this many years ago. Your accountant, unfortunately, is correct.
  • Thanks for the quick response.

    I know I probably grasping at straws but the big difference with this process is that the PO is not closing. I'm being paid off because the PO want my Sub Postmaster contract and they will appoint a new "Operator" on a very different contract, who incidentally pick up the business free of charge!

    In those circumstances can the payment be treated as "Redundancy"?

    PO Pete
  • In most employment situations the 'employer' would be on a sticky wicket here based on the not always known premise that an employee is never made redundant - it is the position that is made redundant.

    Nevertheless I am sure that the PO have obtained advice on this and I would not be comfortable in challenging this, whatever it may be.

    The issue here is more about the legality of being made redundant as opposed to the tax treatment. Perhaps this would be addressed better on the employment board?
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