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Changes to Taxation of Termination Payments

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HM Revenue & Customs has published draft legislation changing the taxation of termination payments, intended to come into force April 2018. The main changes are:-

• make all PILONs (payments in lieu of notice) taxable, even if    they are non-contractual;
• require payment of employer NICs on sums over £30,000 (not currently payable);
• ensuring payments for injury to feelings are subject to tax (there is currently a conflict of judicial authorities on this point)

The precise wording of the draft legislation is open for consultation until 5 October.

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