CIPP survey: Simplification of the tax and NI treatment of termination payments

21 September 2015

The Policy Team has published a survey to gather views on how the tax and National Insurance treatment of termination payments can be made simpler and fairer.

Our survey may take 15-20 minutes to complete however the changes proposed would have a big impact on payroll processes if taken forward, so please do take the time to share your views.

The consultation ‘Simplification of the tax and National Insurance treatment of termination payments’ was published as a result of the Office for Tax Simplification (OTS) review of termination payments, in which they concluded that the current system was fraught with confusion and uncertainty. The OTS found that employers want to pay the correct amount of tax but the complexities of the system often prevent this from being achieved.

The government therefore wants to review the tax treatment of termination payments with the aim of creating a regime that is easy for employers to administer and for employees to understand.

The consultation particularly seeks views on:

  • removing the distinction between contractual and non-contractual termination payments and whether this will make it easier for employers and employees to understand
  • the design of the new exemption from income tax and NICs
  • whether the income tax and National Insurance treatment of termination payments should be aligned
  • which of the existing exemptions which remove the liability to income tax should be retained and whether any new exemptions should be introduced.

The survey will run until 2 October 2015. Thank you for your time and input.

Up to date details of all consultations and associated surveys and responses can be found under Membership/My CIPP/ Policy Think Tank on the CIPP website.