In response to the consultation on reform of the tax treatment of redundancy payments, the government is consulting on draft legislation to introduce NICs payments on redundancy payments over £30,000 from April 2018
From April 2018 employers will have to pay national insurance contributions (NICs) on redundancy payments above £30,000 (which are currently only subject to income tax) to align the rules for income tax with employee liability.
HMRC is now consulting for eight weeks on the draft legislation which will introduce changes to Income Tax (Earnings and Pensions) Act 2003 (ITEPA).
It will ensure that the first £30,000 of a termination payment remains exempt from income tax and any payment paid to the employee that relates to the termination of the employment will continue to have an unlimited employee NICs exemption.
In July 2015, the government published a consultation on the tax and National Insurance Contributions (NICs) treatment of termination payments.
The consultation received 109 written responses from a variety of different groups such as tax advisory firms, employers of all sizes from different sectors, and individuals.
The government is now consulting on the draft legislation that will bring these changes into effect.
The deadline for feedback is on 5 October 2016.
Simplification of the tax and National Insurance treatment of termination payments is here.
