Stamp Duty Land Tax: changes to the filing and payment process - CIOT comments

6 Jul 2017

In responding to this consultation we raise concerns about the lack of simplicity and clarity, and uncertainty that will arise if the government‚ s proposals are introduced as they stand.

We are disappointed that the government has not taken the opportunity afforded by the work of the OTS to simplify the income tax and NICs treatment of termination payments. The proposed ‚ PILON‚ legislation to tax all payments not directly related to the termination of the employment will be far too complicated and will create a huge amount of confusion for employers, employees and HMRC alike.

Furthermore, we think imposing employer NIC on termination payments in excess of £30,000 is revenue raising with no quid pro quo, eg an increase in the £30,000 threshold that has been unchanged since 1988, is wrong when the original intention was that any changes to the treatment of termination payments would be revenue neutral. And that the introduction of employer only NIC is not only complicated but could potentially could result in errors arising (e.g. as to whether and to what extent a payment made on the termination of an employment is liable to employer NIC, employee NIC, both or neither).

Finally, we urge the government to rethink its decision to remove Foreign Service Relief (FSR). We believe that it is a mistake to abolish FSR. FSR is as relevant today as it was when it was introduced. Termination payments arise in a whole range of circumstances including redundancy, breach of contract, irreconcilable differences between employer and employee, a personal thank you for a relationship that has endured over many years etc. and our view is that it is right to reflect FSR in deciding what should properly be sourced to the UK and what to non-UK service. This is logical and fair, and has worked well in practice over many years.

Technical Team