Simplification of the tax and National Insurance treatment of termination payments

24 July 2015

A consultation has been published asking for views on how the tax and NICs treatment of termination payments can be made simpler and fairer.

The government is considering how they can make the tax and National Insurance contributions (NICs) treatment of termination payments simpler and fairer and wants to hear your views on how that can be achieved.

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 consultation will run until 16 October 2015.

CIPP comment

As you would expect the Policy Team will be involved with this consultation and will most certainly be asking for your opinions over the coming weeks so keep an eye out for another survey.