Government simplifies termination payments rules | KPMG | UK
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Autumn Statement 2016: Government simplifies new rules on termination payments but employers face higher costs

Government simplifies termination payment rules

Welcome simplifications to termination payments may be costly to employers applying to payments over £30,000.


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Commenting on today’s Autumn Statement announcement on termination
payments, Colin Ben-Nathan, Tax Partner at KPMG, said:

“The Government has listened to representations from KPMG amongst others on the complexity of the proposed new rules on termination payments and pay in lieu of notice, to apply from April 2018. The new rules will only apply to basic pay if their notice period is not worked, rather than the full package, making the position much simpler and we welcome this.

“That said, the government has confirmed employers will face an increase in their costs with employers’ National Insurance contributions applying to termination payments over £30,000. It would be an unfortunate and clearly unintended consequence if businesses decided they had to reduce payments to those losing their jobs in these circumstances.”



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