ACCA Advanced Taxation (ATX) Practice Exam

Is a 'golden hello' fully taxable when it is received?

1. Yes, it is taxable

2. No, it is tax-exempt

3. Only partially taxable

4. Taxed over time

The correct answer is: Yes, it is taxable

A "golden hello" is a payment made to a new employee as an incentive for joining a company, often used to attract high-caliber candidates. This type of payment is fully taxable when received, as it is considered a form of employment income. In many jurisdictions, including those that follow similar principles to the UK tax system, any cash or benefits provided as remuneration for services are subject to income tax. The rationale is that such payments contribute to the individual's overall earnings, similar to regular salary or bonuses. Thus, when an employee receives a golden hello, it is treated as taxable income, meaning it is subject to applicable income tax rates and potentially National Insurance contributions or similar social security taxes depending on the local laws.