Taxation changes from 6 April 2018
- When making non-contractual termination payments in lieu of notice (excluding holiday pay or bonuses) employers must calculate the post-termination period ‘earnings’ subject to income tax and NICs. The formula to calculate the taxable earnings is:
basic pay x number of months’ notice period – termination payment
Even where there is no contractual pay in lieu of notice clause, these payments will be taxable.
- Some ‘injury for feelings’ payments that would otherwise have been tax free will no longer be so unless they relate to psychiatric injury or a recognised medical condition.
Key compensation limit changes from 6 April 2018
Employment right (maximum sums) |
Previous limit |
Current limit (as of 6 April 2018) |
Weekly pay |
£489 |
£508 |
Unfair dismissal basic award/redundancy pay |
£14,670 |
£15,240 |
Unfair dismissal compensatory award |
£80,541 (or a year's salary if lower) |
£83,682 (or a year's salary if lower) |
National minimum wage
For those over 25 who are entitled to the National Living Wage, this will rise from £7.50 to £7.83 per hour. For apprentices it will rise from £3.50 to £3.70 per hour.
Changes to family payments
From 1 April 2018, statutory maternity, paternity, adoption and share parental pay increases to £145.18 per week. Maternity allowance will rise to the same figure on 9 April 2018.
Gender pay publication deadline
The deadline for private and voluntary sector gender pay gap reports for employers with over 250 employees is 4 April 2018.