Budget 2016: Employers hit with £500m bill for NICs on pay-offs
- 1 Min Read
Employers will pay National Insurance Contributions (NICs) on pay-offs where income tax is also due from April 2018.
Employers will pay National Insurance Contributions (NICs) on pay-offs over £30,000 from April 2018.
It is expected to cost employers almost £500m a year by 2020-21, and a total of £1.4bn over the next five years.
The move was announced by chancellor George Osborne as part of his Budget speech and will apply to termination payments and other similar payments where income tax is already payable.
Treasury confirmed that for people who lose their job, payments up to £30,000 will remain tax-free and they will not need to pay NICs on any of the payment.
Osborne said: “We’ll tighten rules around the use of termination payments. Termination payments over £30,000 are already subject to income tax. From 2018, they will also attract employer national insurance.”