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Termination Payments
Changes to PENP: 6 April 2021 22 April 2021
As a reminder, there were some changes to the calculation of Post-Employment Notice Pay (PENP) from 6 April 2021, for payroll professionals to be aware of.
The calculation applies to employees who are paid on a monthly basis but do not have a notice period that is not expressed in months. The way the previous ‘standard formula’ was operated unfortunately meant that different outcomes would be provided on the basis of which calendar month employment was terminated. This was because it utilised the number of days within a pay period as one of the elements of the calculation, which could vary between 28 and 31 days. The amendment to the calculation means that there will be more consistency, as now the average number of days in the month has to be used, which equates to 30.42 days. An amendment has also been made to section 27 ITEPA 2003, which will mean that non-resident individuals are now also liable for UK tax and National Insurance (NI) contributions on PENP, as they would have been had their period of notice been worked in the UK.
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The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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