It intends to remove the distinction between contractual and non-contractual benefits which will mean that all payments in lieu of notice will become liable to tax. Other proposals include replacing the current £30,000 allowance with an exemption which increases with length of service, is only payable if the termination is because of redundancy and only applies to those who have two or more years’ of service.
We are concerned that these proposals, far from simplifying the system, will add another layer of complexity and will make it more difficult for your business to agree exit terms with staff.
It is our intention to respond to the consultation, which ends in October, and we would like to represent the views of our clients in our response. We have outlined the main proposals in the questionnaire (see below) and, if you would like your views to be included in our response, we would be obliged if you could respond by 12 October.
We are proposing to respond in some detail to the consultation as we think it could have a significant impact on our clients when it comes to managing exits and the cost of those exits. We have already had some useful feedback from clients which we intend to incorporate in to our formal response. Please don’t feel the need to answer all of the questions, but just the ones that you are most interested in!
More detail on the proposals can be obtained here.
Employment Update - September 2015