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.