Poole Office: 01202 678555

Wimborne Office: 01202 849169

  • slider-1.jpg
  • slider-2.jpg
  • slider-3.jpg
  • slider-4.jpg

Request a Call Back

Please enter your name and phone number

Latest News

Budget date remains to be confirmed
18/09/2018 - More...
The Chancellor Philip Hammond, has...

Help-to-Save scheme launched
18/09/2018 - More...
The new Help to Save scheme for people...

CGT record keeping
18/09/2018 - More...
The annual Capital Gains Tax (CGT)...

Search News

Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

»Sign up for the Newsletter
» Login

 

Treatment of termination payments
11/04/2018

With effect from 6 April 2018, employers will need to pay income tax and Class 1 national insurance contributions (NICs) on certain parts of termination payments made to employees whether or not these payments are contractual. The element that is liable to taxation is the amount of the termination payment that represents a payment in lieu of notice, commonly referred to as 'PILON'. The measure will mean that all PILONs rather than just contractual PILONs will be treated as taxable earnings.

In addition, all employees will pay income tax and Class 1 NICs on the amount of basic pay that they would have received if they had worked their notice in full, even if they are not paid a contractual PILON. This means that the tax and NICs consequences will be the same for everyone and will not be dependent on how an employment contract is drafted or whether payments are structured in some other form, such as damages.

The changes apply to payments, or benefits received on, or after, 6 April 2018 in circumstances where the employment also ended on, or after, 6 April 2018. Foreign service relief on termination payments has also been removed for all UK residents, apart from seafarers from 6 April 2018.

Planning note

The introduction of employer NICs on termination payments above £30,000 and on sporting testimonials of more than the £100,000, which were also expected to take effect from 6 April 2018, is delayed until 6 April 2019.


Contact Us

Poole Office

Tower House, Parkstone Road
Poole, Dorset
BH15 2JH
Tel: 01202 678555

This email address is being protected from spambots. You need JavaScript enabled to view it.

Company Registration No: O7430971
VAT Registration No.107585703

Wimborne Office

Beaufort House, 2 Cornmarket Court
Wimborne
BH21 1JL
Tel: 01202 849169

Membership

ICAEW-White

Save