Despite attempts by HMRC to simplify the rules of tax and national insurance contribution (NIC) treatment of termination payments, the latest changes have potentially made the process more complex.
In April 2018, the redundancy and terminations payments rules were revised so that:
- Post-employment notice pay (PENP) is introduced. This will be subject to tax and NIC for the employee
- Statutory redundancy payments will still be exempt from tax
- Foreign service relief is largely abolished for employees who are UK tax resident in the tax year their employment ends
- Injury to feelings’ payments fall outside of the full exemption for disability payments, except in limited circumstances
- The Treasury can vary the £30,000 threshold by regulations.
If you are unsure how these changes will affect your employer responsibility in any of the above scenarios, SFB can help simplify the process. For the best advice to protect yourself, call us on 03333 444 171.
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