Autumn Statement

Published on: 02/12/2016


Last week the Chancellor of the Exchequer, Philip Hammond, gave his first Autumn Statement.

There were a number of measures announced and the following are of particular interest to employers:

Taxation of Termination Payments

As announced in the 2016 Budget, it was confirmed that from April 2018 termination payments over £30,000, which are subject to income tax, will also be subject to employer NICs.

Following a technical consultation, tax will only be applied to the equivalent of an employee's basic pay if their notice is not worked, making it simpler to apply the new rules. The change is going to be monitored.

The first £30,000 of a termination payment will remain exempt from income tax and National Insurance.

Employee Shareholder Status (ESS)

ESS was introduced as a new category of worker status in September 2013. Under this, employee shareholders are given shares in the business in exchange for waiving certain employment rights, including the right to claim unfair dismissal (except where the dismissal is automatically unfair or discriminatory) and the right to receive statutory redundancy pay.

ESS shares qualify for certain income tax and capital gains tax (CGT) reliefs (although the CGT relief was restricted, following the 2016 Budget). As there was evidence that the ESS was primarily being used for tax-planning purposes by high-earning individuals, it was announced in the Autumn Statement that the scheme will be abolished for arrangements entered into on, or after, 1 December 2016 (the advantages will continue to apply for those entered into before that). The Government intends to close ESS to new users altogether 'at the earliest opportunity'.

Salary sacrifice

Confirmation has been received that the tax and employer national insurance advantages of salary sacrifice schemes will be removed with effect from April 2017, save for arrangements relating to pensions, childcare, cycle to work and ultra-low emission cars.

Arrangements that are already in place before April 2017 will be protected until April 2018, with arrangements for cars, accommodation and school fees benefitting from protected status until April 2021.


This information is for guidance purposes only and should not be regarded as a substitute for taking professional and legal advice. Please refer to the full General Notices on our website.