National insurance contributions will be payable on termination payments from 6 April - News Alert

Termination payments that employers make voluntarily to departing employees currently do not attract a national insurance charge.

This will change on 6 April 2020 when employer national insurance contributions of 13.8% will become payable on such payments to the extent they exceed £30,000.  The payments will remain exempt from employee national insurance contributions.

This change may significantly increase the cost to employers of parting company with employees where the employer will be making voluntary termination payments in excess of £30,000.  This will be an incentive for some employers to carry out certain restructures and make the related payments to departing employees in the current tax year, before the change takes effect.

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