The UK government has launched a consultation on potential reforms to the taxation of termination payments. The intention is to simplify the tax treatment of these payments to make them easier for employers to administer and employees to understand. The government proposes removing the distinction between the treatment of contractual and non-contractual termination payments so that all termination payments would be subject to income tax and social security contributions. To make up for this, however, alternative options for tax and social security exemptions are being considered, including a blanket exemption and an exemption linked to statutory redundancy. The consultation period will run until October 16th 2015.