Payments and benefits provided to an employee in connection with the termination of employment are generally liable to NIC if paid as 'earnings' from the employment1. NIC is not payable, however, in the case of payments or benefits which fall within the provisions in ITEPA 2003, ss 401–416 for tax purposes, and which are not otherwise taxable. However, an employer Class 1A NIC is due on all termination payments made on or after 6 April 2020 in excess of the £30,000 exemption (see below). The exemption on employees' NIC is unaffected by the April 2020 changes.
Unlike most Class 1A which is payable by the employer after the tax year end (see E4.11124), the Class 1A NIC liability on cash termination payments over £30,000 is payable contemporaneously through payroll (see 'Payments made on or after 6 April 2020' below).
As mentioned above, Class 1A (employer-only) NIC is due on payments which are taxable per ITEPA 2003, ss 401–416, insofar as they exceed £30,000. Any NIC due on other cash payments provided in connection with termination
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 16:14