UK: Termination payment costs to change in April 2020
![Connecticut Enacts Paid Family and Medical Leave](/insights/law-and-policy/uk-termination-payment-costs-to-change-in-april-2020/_jcr_content/root/insight-wrapper/lead/lead-media/image.coreimg.jpeg/1678550039935/uk-2019-484937354-1200x630.jpeg)
The cost of termination payments for United Kingdom employers could increase from 6 Apr 2020 when employers will have to pay National Insurance Contributions (NICs) of 13.8% on any part of an employee’s termination payment exceeding £30,000. Currently, employers only pay income tax on payments to compensate employees for employment loss if the amount exceeds £30,000. The introduction of NICs on termination payments was announced by the government in 2017, but its implementation was postponed from 2018 until 2020.
Employers should adjust their payroll processes — and factor in the change — when negotiating termination payments after 6 April.
Related resources
- Employment income manual (HMRC, 5 Feb 2020)
- Income tax and national insurance contributions: Treatment of termination payments (UK government, 5 Dec 2016)
About the author(s)
Related products for purchase
Related Solutions
Related Insights
Related Case Studies
Curated