Termination payments – changes to tax treatment
18 August 2016
In July last year, we reported that the Government had launched a consultation on simplifying the tax treatment of termination payments. After some delay, it has finally published its response along with draft legislation which sets out the changes it has decided to make.
It has been confirmed that the first £30,000 of any termination payment will remain exempt from income tax and the entirety of the payment will be exempt from employee NIC’s.
However, the main changes include:
- making any payment in lieu of notice subject to income tax and Class 1 NICs, regardless of what is in the contract
- making employer NICs payable on termination payments above £30,000
- clarifying that the exemption for injury does not apply in cases of injury to feelings
The changes are proposed to take effect from April 2018 and the draft legislation is open for consultation until 5 October 2016.
For further support on the consultation on simplifying the tax treatment of termination payments, please contact our employment lawyers on firstname.lastname@example.org
Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at email@example.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.
Read more articles