Consultation on simplification of tax treatment of termination payments

Close date: 5 October 2016

The Government consults on draft legislation to make changes to the tax treatment of termination payments. The proposals include:

  • making all payments in lieu of notice taxable and subject to Class 1 national insurance contributions (NICs) (removing the distinction between contractual and non-contractual notice payments);
  • aligning the tax and NICs treatment of termination payments so that employer NICs will be payable on payments above £30,000 as well as income tax; and
  • removing the current exemptions in relation to foreign service relief and injury or disability payments.

Consultation document: Simplification of the tax and national insurance treatment of termination payments - consultation on draft legislation