A new factsheet outlining further details on the changes being made by National Insurance Contributions (Termination Awards and Sporting Testimonials) legislation has been published by HMRC.
The Bill aims to more closely align the Income Tax and NICs treatment of termination awards and sporting testimonials. Currently, these two elements are subject to different Income Tax and NICs treatment, which creates confusion. To resolve this, the Bill introduces a 13.8 per cent Class 1A Employer NICs charge to income derived from a termination award (over £30,000) or sporting testimonial (over £100,000).
HM Treasury believes that the thresholds mean that only around 20 per cent of termination awards and a very small number of sporting testimonials will be affected each year. The changes come into effect from 6 April 2020.
Further details about the changes being made by this legislation can be found in HMRC’s guidance on the Bill.
