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Simplification is required.
The simplification of the tax and National Insurance treatment of termination payments is considered in an HMRC consultation. It comes in response to the Office of Tax Simplification’s final report on expenses and benefits.
Views are sought on:
- removing the distinction between contractual and non-contractual termination payments and whether this will make it easier for employers and employees to understand;
- the design of a new exemption from income tax and National Insurance;
- whether the income tax and National Insurance treatment of termination payments should be aligned; and
- which of the existing exemptions that remove the liability to income tax should be retained and whether any new ones should be introduced.
Comments should be emailed to employmentincome.policy@hmrc.gsi.gov.uk by 16 October 2015.
