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Business Services • Business Tax • HMRC • Personal tax • Small Business • Tax Relief • Taxation

Changes to tax-free termination payments legislation

By RJP LLP on 28 March 2017

POLICY ON HOLD UNTIL AFTER GENERAL ELECTION

Reformed tax legislation which was due to take effect from 6 April 2018, in relation to how termination payments made to employees are taxed, has been excluded from Finance Bill 2017. The objective of this new legislation was to ensure that tax-free exemptions cannot be accessed outside of genuine redundancy situations. Our earlier blog explains the background to these changes in detail. These proposals may still be introduced after the general election on June 8th.

As confirmed in the Spring Budget 2017, the new rules are as follows:

Payments in lieu of notice (a.k.a. PILONs) will be taxable as earnings regardless of whether they are contractual or not;

There will be no exceptions for foreign service employees;

Termination payments to the value of £30,000 can be received free of tax and national insurance contributions; amounts over this threshold will be taxable at the appropriate rates;

Employers will be required to pay employers’ national insurance contributions on all termination payments exceeding £30,000;

If you are an employer wanting to understand how termination payments are taxed, or looking to terminate an employment and unsure about the impact of these changes, please contact us at partners@rjp.co.uk.

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I wanted to write and express our gratitude for your help and hard work in getting Probate through and settling all the taxes. I am so pleased that we selected RJP, as your professional help and updates throughout this process have been invaluable. If at any time in the future Probate assessment may be needed, you will be our first port of call. Once again, many thanks to the whole team.

Dan Cook, Probate client

I just wanted to drop you a short note to say how grateful I am for the support that RJP has provided over the past 4 weeks while our Financial Controller was away. I struggle to comprehend how much work your staff get through during their weekly visits and they are always a pleasure to have around the office.

I Evans, CFO, Mobliciti

Just a quick e-mail from me to thank you for achieving the target for producing the draft accounts – it is very much appreciated and gives a first class impression of your firm. Many thanks.

J Stanfield, Chairman, BBS Actuaries Ltd

I would like to take this opportunity to thank you very much for the amazing job you have done navigating us through this whole process. My family and I also really appreciate the care and compassion demonstrated by you and your team in every dealing. Our thanks to everyone.

M Goldsmith, Probate Client

RJP provide our company with a complete service which takes the stress and strain away from the day to day running of our accounts! Their understanding of our business and their patience and advice is invaluable.

Outsourcing Client

60 Day Deadline for CGT Returns and Tax Payments

If you sell a property and incur capital gains tax on the transaction, you will need to file a tax return and also pay any tax that is due within 60 days of completion, or penalties will arise. Need help with your property taxes? Talk to us.