The UK government proposes to remove income tax and National Insurance (Social Security) exemptions from all notice payments in lieu with effect from April 2018. The current £30,000 tax exemption applies where there is no express provision for an employer to make an in lieu of notice payment in an individual’s employment contract. The exemption will continue only in respect to genuine severance payments arising from such situations as unfair dismissal or redundancy – although excluding any relevant additions such as bonus payments that apply in the notice period. Employers, but not employees, will also be required to pay National Insurance on severance payments above £30,000.