The Finance Act (No 2) Act 2017 has introduced a number of amendments in relation to the tax treatment of termination payments. The changes apply where the employment ends on or after 6 April 2018 and the key amendment of note relates to the taxable status of payments in lieu of notice (PILONs).
Previously, if the contract of employment did not have a PILON clause it was possible to pay the PILON without deduction of tax. From 6 April all PILONs, not just contractual PILONs, will be treated as taxable earnings, which means that:
Furthermore, it is proposed that, from 6 April 2019, employer NICs will be payable on termination payments above £30,000.
If you have any questions on the above or any aspect of employment law, please contact Debbie Sadler on email@example.com or on 0118 957 5337.
Published on 12/04/2018