Termination Awards and Sporting Testimonials – real-time Class 1A NICs guidance

24 September 2019

HMRC’s Software Developers Support Team (SDST) has provided some guidance for software developers which employers and payroll practitioners may also find useful.


Change to ‘real-time Class 1A NICs’

Termination Awards’ are payments received in connection with the termination of a person’s employment.


‘Sporting Testimonials’ are used as shorthand for non-customary and non-contractual Sporting Testimonials. If an individual is contractually entitled to a Sporting Testimonial this would be treated as regular income and should be reported and taxed as such.


Currently, tax is due on the amount of a Termination Award over the threshold of £30,000 (the threshold is £100,000 for Sporting Testimonials). For example, if an individual receives a Termination Award of £39,000, the employer would pay income tax on £9,000 as this is the amount above the threshold. From April 2020, employer Class 1A NICs will also be due on the amount above the threshold.


Class 1A NICs are already reported and collected on expenses and benefits as part of the annual P11D(b) process.


From April 2020 the Class 1A NICs on termination awards and sporting testimonials will be calculated, reported and paid as part of the existing PAYE cycle.



The guidance, produced for payroll software developers by HMRC’s Customer Strategy and Tax Design, contains background on these payments and includes a number of illustrative examples.



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