It’s good news for employers as the Government has announced that it has delayed plans (for a second time) to make termination payments in excess of £30,000 subject to employer national insurance contributions (NICS).
This will now take effect from April 2020 and not April 2019 as planned.
This means that the cost of settlement payments will not increase, for now. Currently, whilst income tax is payable on termination payments over £30,000, there is no employer NICs payable. The proposal was to change this so that employer NICs would be payable on payments in excess of £30,000.
This change was likely to impact upon the amount of settlement that an employee would receive as employers may be mindful to the fact that this is an additional cost that they would bear and would factor this into any negotiations. However, the status quo has now been maintained until April 2020.
If you would like to discuss anything in this article, please contact a member of our Employment Department.
This article is not a definitive statement of the law. It is designed as a free update on the law at the time of publishing. It is not a substitute for legal advice on specific facts and circumstances. BakerLaw LLP and/or the writer accepts no liability or responsibility for reliance on this article and recommends that you seek independent legal advice on your specific circumstances prior to taking any steps.