Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, with reference to the consultation on Simplification of the Tax and National Insurance treatment of termination payments: government response and consultation on draft legislation, which closed for comments on 5 October 2016, what assessment he has made of the responses to that consultation; what changes he plans to make to the tax and national insurance treatment of redundancy payments in lieu of notice; and whether he still plans to introduce those changes in April 2018.

The Government listened to stakeholder feedback on the consultation and published revised draft legislation in the provisions for Finance Bill 2017 on 5 December 2016.

As announced at Autumn Statement 2016, all contractual and non-contractual payments in lieu of notice will be taxable as earnings. Tax will be applied to the equivalent of an employee’s basic pay if their notice is not worked.

The first £30,000 of a termination payment will remain exempt from Income Tax and National Insurance.

The changes will take effect from 6 April 2018.