Payroll - Termination or Sporting Testimonial Payments

Termination Payments

Termination payments are received in connection with the termination of a person's employment. Income tax and Class 1A NIC is due on amounts over a threshold (as at April 2021 £30,000). The Class 1A NIC is payable by the employer.

Sporting Testimonials

Sporting Testimonials are used to describe no-customary and non-contractual sporting testimonials. If an individual is contractually entitled to a sporting testimonial this would b3 treated as regular income and reported and taxed as such. Income tax and Class 1A NIC is due on amounts over a threshold (as at April 2021 £100,000). The Class 1A NIC is payable by the employer.

Dealing with either type of payment in the payroll

Unlike Class 1A NIC's reported and collected on expenses and benefits as part of the annual P11D(b) process. The Class 1A NIC's on termination and testimonials are calculated, reported and paid as part of the existing PAYE cycle along with any income tax due.

Set up appropriate payroll elements

If the payment exceeds the threshold two elements will be necessary, one for the non taxed element, one for the taxed/Class 1A NIC element. The taxed element will be for those amounts over and above the tax free threshold. Navigate to

PAYROLL - CONFIGURE PAYROLL - PAYROLL ELEMENTS - ADD ITEM

ADD NEW Pay Element
Field	Non Taxed Element	Taxed Element
Type	Pay	Pay
Payment Pattern	Ad Hoc Amount	Ad Hoc Amount
In PAYE Gross	-	tick
In NIC Gross	-	-
In Pension Gross	confirm with advisor	confirm with advisor
In NIC 1A Gross	-	tick
Account	Select as appropriate	Select as appropriate

Click SAVE ITEM and when ready SUBMIT to store the element

Run the payroll