Budget 2016: Taxation of Termination Payments

It was announced that legislation will be introduced in the 2017 Finance Bill to change the rules on the taxation of termination payments, so that all payments in lieu of notice and some damages payments will be treated as taxable employment income.

It is also proposed that a future NIC bill to be laid before Parliament in 2018 will align the rules on income tax and NIC so that payments in excess of the £30,000 limit in Income Tax (Earnings & Pensions) Act 2003, s 404 will also be subject to NIC.

A technical consultation will be launched over the summer on both of these changes.