A £95,000 cap on the pre-tax total value of exit payments
in the public sector will come into force on 4 November 2020. This
will have significant implications for public sector organisations,
particularly those planning or going through restructuring at the
moment. Organisations that must apply the cap need to start
planning for this change now and ensure they follow the new rules
when they come into force.
The cap is expected to lead to significant savings for the
Treasury. According to the annually published Whole of Government
Accounts, exit packages over £100,000 amounted to £200
million in the 2017-18 financial year. The total of all exit
packages in the same financial year was £900 million.
Compulsory redundancies and other agreed departures such as
voluntary redundancies are included within this total.
