Termination Payments
The Chancellor has announced that the government will be legislating in Finance Bill 2017 to tighten and clarify the rules on which types of payments will be treated as salary and which will be subject to the termination payment rules. This will ensure that the rules are applied consistently and fairly. These changes include: clarifying that all payments in lieu of notice (regardless of whether they are contractual or not) will be subject to income tax and National Insurance Contributions (NICs) in the same way as other payments of earnings; tightening the rules to ensure that certain contractual payments cannot be paid as damages, instead such payments will be treated as earnings and subject to tax and NICs; and removing the exemption for foreign service. Additionally, the government will be aligning employer NICs with the income tax treatment, so the elements of a termination payment over £30,000 will be subject to employer NICs if they are subject to income tax. These changes will come into effect from April 2018.
The government will be publishing a technical consultation setting out the detail of these changes over the summer.
CIPP comment The CIPP will be studying the consultation document once it is published and will, as usual, seek member views which will be used as a basis for our response.
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CIPP Policy News Journal
25/04/2016, Page 180 of 453
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