Notwithstanding that the government is yet to publish the response to its consultation on the simplification of the tax and NI treatment of termination payments (which, among other things included a proposal to remove the current £30,000 tax exemption and replace it with an exemption for redundancy payments rising in line with employees’ length of service), the Chancellor’s recent Budget seems to suggest that the £30,000 exemption is here to stay.

The Chancellor yesterday confirmed that as of April 2018, employer’s National Insurance contributions will be payable on termination payments in excess of £30,000, however confirmed that “the first £30,000 of a termination payment will remain exempt from income tax and the full payment will be outside the scope of  employee NICs”.

The response to the consultation is expected later this year, but the implications of this statement in the Budget suggest – for the immediate future at least – that the current £30,000 tax exemption will remain.

For more information regarding Termination Payments or any other employment query, please contact Sarah Luxmoore