EPN599 - Employer to pay NI on Exit payments in excess of £30,000

Audience

This notice will be of interest to:

  • Pension leads
  • HR managers
  • Exit/redundancy leads
  • Finance directors and managers
  • Payroll managers
  • All employers

Action

  • The National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2019 introduced a new charge for employers, who will be required to deduct Class 1A National Insurance contributions, in real time, on termination awards from 06 April 2020.
  • The legislation that will place an Employers NICs liability on termination awards above £30k will take effect from 06 April 2020.
  • You should plan work with your payroll or payroll providers to enable you to deduct Class 1A National Insurance contributions, where relevant, from 06 April 2020. You should also review your current accounting arrangements, and consider any changes that may be required.

Timing

  • Immediate

Detail

1. EPN 556EPN 552 and EPN 523 detailed that employers would be charged Class 1A National Insurance contributions on Exit awards (including Voluntary, Compulsory and Efficiency) from 01 January 2019. However implementation of this change was delayed.

2. The purpose of this EPN is to provide confirmation of the need for employers to deduct class 1A employer National Insurance contributions on termination awards from 06 April 2020. Guidance on how to deliver these changes can be found below. More information can be found at paragraph 3.12 on page 42 of the 2018 Budget.

3. Responsibility for the payment of Exit awards passed to employers on 01 January 2019. Employers are reminded that they are responsible for making all relevant deductions and payments, including Income Tax and National Insurance as appropriate.

Next steps

4. From 06 April 2020 your payroll provider(s) will need to deduct Class 1A National Insurance contributions due on Exit awards and pay them to HMRC through Real Time Information.

Contacts

If you need to speak to the Scheme Administrator (MyCSP) about your exit scheme please contact exit.schemes@mycsp.co.uk

For Scheme Manager (Cabinet Office) approval of new or revised Voluntary Exits schemes, please contact redundancyschemes@cabinetoffice.gov.uk

If you have a question about the distribution of EPNs, or would like to receive them in a different format, please contact EPN@MyCSP.co.uk.

You can find electronic copies of the Employer Pension Guide, all current EPNs and forms in the Employer section of the Civil Service Pensions website.

This notice is for employers and should not be issued to scheme members.

Members can find information about their pension by visiting the member's section.

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