The proposed Class 1A National Insurance contributions (NICs) on termination payments has still not been confirmed.
Following a discussion at the HMRC Employment and Payroll Group, it has been reported that the government still intends to impose an employer Class 1A NICs liability on the taxable portion of a termination payment. However, as yet, an implementation date has not been confirmed.
Although there is not an official implementation date, the government did confirm that the new Class 1A NICs charge will not be reported through the Full Payment Submission for 2019/20.
Despite a lack of confirmation, employers should not rule out the new charge being introduced from April 2019. It is likely that this will initially need to be reported on a P11D(b) along with other Class 1A NICs liabilities, even though the government’s long-term aim is to have this charge reported in real time.
Richard George, Director of Education at the Learn Centre, commented: “We initially saw the plan for changes in termination payments in last year’s National Insurance bill but now, along with the u-turn to changes to class 2 National Insurance, it has left the payroll industry with challenges around implementation and software requirements for the 2019-20 tax year. It's going to be vital that payroll professionals keep up to date with news and changes over the coming months which will including changes through the budget to ensure compliance of both operational and system development into next year”
