New exit strategy

Termination payments over £30,000 will be subject to employer’s national insurance contributions from 2018 (under £30,000 is currently free of tax). Responding to the Chancellor’s announcement in this week’s Budget, Peter Boreham, principal, Mercer says: “In practice, many termination payments are not classed as redundancy for tax purposes. However, if and when large-scale redundancies become common again, there is a risk that this change will put pressure on the level of redundancy payments provided.” For people who lose their job, payments up to £30,000 will remain tax-free and they will not need to pay National Insurance on any of the payment.