In the Budget statement (the UK Government's proposals for tax and spend usually announced in March or April of each year) delivered by the Chancellor George Osborne on 16 March 2016, it was announced that from 2018 termination payments over £30,000 would start to be subject to employer's National Insurance contributions (under £30,000 is currently free of tax and will remain free of National Insurance contributions).

As noted in 2015 Year in Review, the response to the consultation on the simplification of the tax and national insurance treatment of termination payments are expected in 2016. The government has indicated in the Budget that from April 2018, the government will tighten the scope of the exemption to prevent manipulation. We therefore anticipate that there will be further and, potentially, more wide-ranging changes to termination payments made over the next few years.