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Home » News & Insights » Taxation of Redundancy Payments

Taxation of Redundancy Payments

Posted on 30th December 2017

Currently, termination payments over £30,000 are subject to income tax but not National Insurance Contributions. It was announced at the March Budget 2016 that, from April 2018, termination payments over £30,000 will be subject to employer NICs. However, the Government has announced that this change will not now be introduced until April 2019.

Although the first £30,000 of a termination payment will remain exempt from income tax and NICs, from April 2019, termination payments over £30,000 will be subject to employer NICs. So, with employer NICs at 13.8%, this change will lead to increased costs for employers for large termination payments. It is anticipated that this tax will be collected in ‘real-time’, as part of the employer’s standard weekly or monthly payroll returns and remittances to HMRC.

For further details contact Paul Newson

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Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

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