HMRC have updated their booklet CWG2, the ‘further guide to PAYE and National Insurance contributions’, a document we refer to in less common payroll situations.
The 2025/26 version has gone through several publications and updates:
- It was published on 12 February 2025;
- Updated on 06 April 2025;
- Updated on 01 May 2025;
- Updated on 18 September 2025; and now
- Updated on 17 December 2025
ICB details the 17 December 2025 update which is to section 5.1. This is within section 5 entitled ‘Pay, expenses and benefits’ and section 5.1 is entitled ‘What to include as gross pay on your employee’s payroll record’. This details the Income Tax and National Insurance Contributions (NICs) treatment for some pay items.
Under the heading ‘Type of payment: termination awards’, before the update, the CWG2 read that:
- For NICs purposes, Class 1A was due when the payment exceeded the threshold of £30,000; but
- For Income Tax, this was due when the payment exceeded the threshold of £100,000
This appears to be a confusion between the two thresholds that apply - termination awards above £30,000 (Part 9 of the CWG5) and sporting testimonial payments above £100,000 (Part 10 of the CWG5).
The update has corrected this and now refers to a single threshold of £30,000. This relates to termination awards, not sporting testimonial payments made by an independent Testimonial Committee.
For Bookkeepers
This is an update that corrects conflicting information and ICB welcomes this.
As always, our advice to members is to ensure you are referring to the latest version of the CWG2 (dated 17 December 2025).
