Gratuity Payment - for retiring Clerk

Question

Good morning

Our clerk is retiring (pensionable age).  A gratuity payment is due as it was in her contract before the legislation changed  NALC solicitors confirm it should be paid.  My question is I can  not ascertain looking on HMRC if this is taxable.  Ha anybody paid a gratuity payment of late and can they advise.

For actual payment,  what calculation did you use?  NALC are stating x 3.75% final salary.  The formula used on Income tax act is different.

Thanks
Ann

Answer 1

Morning Ann. You may find the information you need by Googling EIM65870, which sets out all the different scenarios and qualifying dates. If all else fails, tax it through the payroll, then the beneficiary may reclaim any overpaid tax.