The Government is to delay implementation of the NIC changes to termination payments exceeding £30,000.00 until the 6th April 2020
Employer class 1A national insurance contributions (NIC’s), as well as tax, will now be payable on that element of a termination payment which exceeds £30,000.00. The NIC Changes were originally announced several years ago and were originally scheduled to take effect from the 6th April 2018. Nevertheless, the implementation of the NIC Bill was then delayed by a year until the 6th April 2019. However, hidden away at page 42 of the 2018 Budget was an announcement that the measures have been delayed by yet a further year until the 6th April 2020.
The rules relating to national insurance contributions on sporting testimonials were also due to change, but have likewise been put back until the 6th April 2020. Under these proposals, employer Class 1A NIC’s will become payable on sporting testimonials of more than a £100,000 lifetime exemption.
The proposal to abolish Class 2 NIC’s for the self-employed was withdrawn on the 7th September 2018, for at least the duration of this Parliament.
Simplification Has Proved To Be More Complex Than Expected
The decision not to abolish Class 2 NIC’s for the self-employed for the duration of this Parliament was made on the basis that “a significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society. Furthermore, it has become clear that, to the extent that the Government could address these concerns, the options identified introduce greater complexity to the tax system, undermining the original objective of the policy.”
The delay in the implementation of the NIC changes as a whole is indicative of the fact that the Government has found it far harder than it anticipated to simplify the system.