Here is the sentence most exit pages avoid: the tax treatment of a termination package materially affects what the exit is actually worth — the same headline figure can land very differently depending on what the payments are and how the package is structured. And here is the second sentence, which this practice says plainly: we don’t advise on tax. Those questions belong with your accountant and Revenue’s published guidance. This page exists because the gap between those two sentences — a question that matters, answered by nobody — is where exits go wrong.
The Failure Mode — and the Questions That Prevent It
The failure mode is depressingly standard: the package signed first and understood after, each adviser assuming the other had the tax piece, the structure conversation that never happened because it belonged to nobody. The prevention is a short list of questions, brought to your accountant before terms are finalised — while structure can still influence drafting: what is the treatment of each element of this package as characterised — notice monies, statutory entitlements, the ex gratia layer? Do any reliefs or exemptions apply to my circumstances, and what would claiming them involve? Does the way the package is structured change the outcome — and is there a better structure to propose while the drafting is live? What should the agreement say, or avoid saying? And what does this mean for my filings? Your accountant answers those on your facts, from Revenue’s guidance; the agreement then gets drafted with the answers in the room. For straightforward packages the conversation is short and a once-off consultation covers it; for senior and structured exits — equity in the mix, unusual elements — it earns its keep many times over, which is why it’s built into the executive tier as standard.
The Sequencing — and the Clauses to Watch
The choreography run here on every package with a meaningful tax dimension: the flag at the start — you’re told the question exists, and asked who your accountant is (or pointed toward finding one; many employees have never needed one, and that’s fine); the loop during drafting — proposed terms shared with your accountant at the right moments, structural input reflected while it can still shape the text, lanes kept clean: they don’t draft waivers, we don’t compute liabilities; the confirmation before signature — nothing signed until the tax picture has been reviewed by the right professional; and clean handover after, for their records and your filings. One category of clause gets special flagging in every review: the agreement’s own tax language — characterisations of payments, indemnities placing tax risk on you, statements about deductions. Each is the employer’s position, not your advice: the characterisation is the drafter’s, the indemnity is a risk-allocation term reaching into your pocket for years, and the employer’s payroll treatment is their compliance obligation rather than a determination of yours. The flag is always the same: your accountant sees this before you sign it. The question costs a phone call; the unasked question can cost the difference between what the exit said and what it was worth.
A Package on the Table and No Tax Conversation Yet?
Then the sequencing starts now: the elements identified, your accountant looped in, nothing signed blind. The legal review and the tax question run in parallel - and both finish before the signature.
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