NIM13206 - Class 1A NICs: liability for Class 1A NICs: Class 1A NICs on termination awards: example 3 鈥� cash and gifted benefit-in-kind

Anita has had her employment with YYYY terminated. She receives a payment of 拢100,000 when her employment is terminated, the payment is made up of the following elements:

  • 拢35,000 in earnings, taxable under section 62 of ITEPA 2003
  • 拢15,000 as compensation for not having to work a notice period (Post Employment Notice Pay, PENP)
  • 拢10,000 as the value of the company car Anita has been given as part of the package
  • 拢40,000 as compensation for loss of employment.

Class 1 NICs are due on 拢50,000 (made up of 拢35,000 earnings and 拢15,000 pay in lieu of notice).

The termination award consists of 拢50,000 (拢40,000 cash and 拢10,000 cash value of the car)

The threshold is applied to the full 拢50,000 with Class 1A NICs at 15%聽being due on that which exceeds 拢30,000.

拢50,000 鈭� 拢30,000 = 拢20,000 脳 15% = 拢3,000.

拢3,000.00 is paid through RTI at the time it is paid.