Employer National Insurance Contributions (“NICs”) will be charged on Termination Payments in excess of £30,000 in relation to payments made on or after 6 April 2020.
Currently, where an ex-gratia payment is made on termination of employment the first £30,000 can be paid free of Income Tax and whilst any amount above this is taxable, the entire payment is currently exempt from NICs.
However, for payments made on or after 6 April 2020, those payments which qualify for the £30,000 tax exemption will be subject to both Income Tax and employer NICs in amounts in excess of £30,000.
This is in addition to the new Post Employment Notice Payment rules rendering all non-contractual payments in lieu of notice taxable.
If you do require any further advice on this issue or any other employment law concern, please contact our Rebecca Ellerbeck at Rowberrys on 01344 466353.