Ex Gratia payments

[[email protected]]

Hi Everyone,

I have recently been offered a Salaried postion, so i will no longer be a contractor. Goodbye expense claims, but hello security! Anyways, I ahve been offered a signing on/relocation "bonus" that will be paid as an Ex Gratia payment with my first pay cheque. What I wanted to know was is this a tax-free sum?

I have done a bit of research, but can only find the term in relation to redundancy payments, where it is tax free up to a £30,000 limit.

Thanks for your help!

Ben

[boredsenseless]

Unless its a relocation allowance (which needs to be backed up by receipts) its taxable. As is everything!

[Darren@UptonAccountants]

Tax free

Redundancy payments are a world apart from just being taken on in a new role!

You need to have a look through any staff handbooks you receive with your new post but it's only likely that you'll receive the relocation tax free up to a certain limit and only if supported by invoices or allowances have been agreed with the Inland Revenue.

Other expenses that could be claimed are dependant on company policy, check the handbook or have a word with HR.

[[email protected]]

Ok, thanks forclearign that up, I thought that was the case, but one of the conditions of accepting the joining bonus is that if i leave within 2 years I have to pay a proportion back. i.e. if i leave after a year then i pay back half.

That means that if I leave after only a month, then I won't have the full amount to pay back. Does that make sense? I guess thats the way to make sure you stay!

[Mordac]

I guess that's why they call it "golden handcuffs".

Serves you right for going permie. "Hello security"? Ever heard of "being made redundant"?

[IR35 Avoider]

I think it will be taxed as salary. Even payments on leaving a job are taxable if you are contractually entitled to them - it's only if they are discretionary that they are tax-free up to £30,000.