UK:
HMRC Guidance On NICs On Termination Payments
28 May 2019
Hogan Lovells
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The government announced in 2016 that it intended to align the
income tax and NICs treatment of termination payments. It was
originally expected that the reform would take effect in 2018, but
this was delayed until 2020.
The legislation that will implement the reform, the National
Insurance Contributions (Termination Awards and Sporting
Testimonials) Bill has now been introduced to Parliament and HMRC
has published further guidance on the measure. At the moment, the
first £30,000 of a termination payment is tax free and
neither employee nor employer NICs are chargeable on any part of a
termination payment. From 6 April 2020, employer NICs at 13.8% will
be payable on any part of a termination payment that is liable to
income tax. However, termination payments will remain exempt from
employee NICs.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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