Until 1997, tax practice in cases where there were continuing benefits after termination of employment had been to try to assess the current lump sum value of the future benefit and levy tax accordingly. This could produce inaccurate results, especially if there was no certainty as to how long a benefit might last. There was no method for adjustment to take account of this.

As from 6th April 1998 the more practical optional alternative of taxing the benefit annually (informally available since April 1996 - see Inland Revenue Press Release 43/97 of March 1997 and consultation paper of 19th December 1997) has been formalised by Finance Act 1998 s.58 which inserted a new s.148 ICTA 1988).

Following on from these new rules, the Income Tax (Employments) (Amendment) Regulations 1999, SI 1999/70 (effective from 6th April 1999) require an employer or former employer to give details to the Inland Revenue and the ex-employee of any award of payments and benefits in connection with the termination of a person's employment (or change in the duties of his employment or emoluments from his employment) where the total amount of the payments and benefits exceeds £30,000. The change is effected by inserting a new regulation 46ZA into the the Income Tax (Employments) Regulations 1993, SI 1993/744, with effect from 6th April 1999.