Budget 2016 – changes to taxation of termination payments, grandparents’ leave

by Laurie Anstis on March 16, 2016

The Chancellor has announced proposed changes to the taxation of termination payments in today’s budget.

From April 2018, the government will “tighten the scope of the exemption to prevent manipulation” and in particular make employer national insurance contributions chargeable on payments over £30,000.

The government has previously consulted on simplifying tax and national insurance contributions on termination payments. It is not clear how the Chancellor’s proposals will relate to that, but the reference in the budget documents to a tax-free limit of £30,000 suggests that that is still intended to be in effect at April 2018.

The details known so far are at para 1.147 here.

Para 1.136 of the same document proposes the extension of shared parental leave to working grandparents, and what appears to an overall review of administration for shared parental leave.

Para 1.147 deals with changes to salary sacrifice arrangements (while permitting most mainstream salary sacrifice arrangements) and para 1.149 says that public sector bodies will be responsible for “paying the right tax” when they engage contractors. Exactly how that will work remains to be seen.