Any payment received by an employee in respect of absence from work through illness (including any Statutory Sick Pay) is subject to both tax and NIC, if made as a result of arrangements entered into by the employer1. This provision would apply, for example, to payments received under a policy of insurance where the employer pays the premium. Payments to the employee's family, as defined, are also taxable2.
Sick pay schemes funded by the employer
Where the employer provides the benefit of guaranteed pay to employees who are off sick or absent due to disability, the availability
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Web page updated on 17 Mar 2025 13:51