Budget Notes

BN61 GREATER LONDON AUTHORITY SEVERANCE PAY

Who is likely to be affected?

1. Members of the Greater London Authority (GLA) and the Mayor of London.

General description of the measure

2. Legislation will be introduced in Finance Bill 2008 to ensure that payments under the new GLA severance pay scheme will be tax-exempt up to the first £30,000 thereby bringing their tax treatment into line with that of payments under similar schemes for Westminster MPs and members of the devolved administrations.

Operative date

3. The legislation will have effect on and after 6 April 2008.

Current law and proposed revisions

4. Payments currently fall within section 62 of the Income Tax (Earnings and (Pensions) Act 2003 (ITEPA) and would be taxed in full.

5. Legislation in Finance Bill 2008 will ensure that the payments are treated as termination payments by an amendment of section 291 of ITEPA.

Further advice

6. If you have any questions about this change, please contact Peter Seedhouse on 020 7147 2529 (email: peter.seedhouse@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk