NIM02035 - Class 1 NICs : Earnings of employees and office holders : Lump sum payments

It is important to gather together as much evidence as possible about any payments made to an employee which might constitute earnings for NICs purposes. It is doubly important to find out as much detail as is possible about “one off” payments and voluntary payments which are made to employees. These are often referred to as lump sum payments.

The correct treatment of any lump sum payment can only be determined when full information is secured. This may mean getting copies of relevant correspondence and documents, as well as interviewing all parties involved on occasion.

It is easy to be misled by the description attached to a lump sum payment. To avoid this it is vital to establish the exact nature of any payment and the circumstances surrounding it. However a payment may be described, it will be earnings for the purposes of NICs if it is derived from the employment.

You will find specific guidance on particular types of lump sum payments in the following places:

Guidance page	Types of lump sum payments
NIM02510	General Information regarding termination payments
NIM02520	Payments in lieu of notice (PILONs)
NIM02555	Post Employment Notice Payments (PENPs)
NIM02570	Payments in lieu of remuneration (PILORs)
NIM02580	Redundancy payments
NIM02610	Ex-gratia payments to retiring employees/directors
NIM02620	‘Golden handshakes’