Class 1A NICs for termination awards and sporting testimonials in Payroll Accord

This guide explains the process for calculating, reporting, and paying Class 1A National Insurance Contributions (NICs) on termination awards and sporting testimonials in Payroll Accord, effective from April 2020.

Contents

• Key information
• Implementation steps
  • Step 1: Create wage type code
  • Step 2: Enter termination pay amount

Key Information

• Since April 2020, employer Class 1A NICs have been due on the amount above the £30,000 threshold.
• These NICs are calculated, reported, and paid as part of the existing PAYE process.
• Reporting is done via the Full Payment Submission (FPS), and payment is included in PAYE payments.

Implementation Steps

Step 1: Create wage type 511000

To implement the calculation, reporting, and payment of Class 1A NICs on termination awards and sporting testimonials, create wage type 511000 as shown below. Pay close attention to the fields highlighted in red, and copy the values exactly as shown.

Step 2: Enter termination pay amount

Use the newly created wage type to enter the actual termination pay amount on which Class 1A NICs are due.

For example, based on a termination payment of £50,000:

• Non-taxable termination pay: £30,000
• Taxable termination pay: £20,000

Please note that when entering wage type 511000 you need to enter taxable amount, in the above example £20,000 and calculation script will automatically calculate 13.8% Class 1A NICs as shown below.