Class 1A NIC on the over-£30k slice
What changed in April 2020
Until April 2020 the over-£30k slice was taxable as income but free of NIC. The National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2020 introduced an employer-side Class 1A charge on that slice. See the HMRC guidance. Source enactment: NICA 2020.
Who pays, and at what rate
The employer pays. The employee does not see this on their payslip. The rate is the employer's secondary Class 1 NIC rate, currently 15% (in force from 6 April 2025 following the 2024 Autumn Budget). This Class 1A is reported through payroll, not on a P11D, despite the "Class 1A" label.
Worked example
Total termination package £50,000. PENP slice £8,000 (taxed as earnings; standard Class 1 NIC). Remaining £42,000 runs against the £30k exemption: £30,000 tax-free, £12,000 taxable as employment income. Employer Class 1A NIC on the £12,000 excess = £1,800 (15%). Employee pays income tax on the £12,000 at marginal rate but no employee NIC.