Date: 17-06-24  Time: 06:35 am
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Author Topic: compensation and tax?  (Read 1450 times)

chilly

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compensation and tax?
« on: 22 November 2012, 08:59:18 am »
well we won our court battle for unfair dismissal and are due back in court on the 22nd of january  :woot does anybody know if we have to pay tax on our compensation? we have no idea how much we will get but it could be as much as a years wage we think (hope) as far as losses go i am about £30 a week down on this gardening leave but on the other hand i am not using £20 a week on fuel so can't complain. will have to find a job in january but i will worry about that later.  ;)
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Pat

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Re: compensation and tax?
« Reply #1 on: 22 November 2012, 09:24:48 am »
Redundancy is tax free for the first £30k.
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chilly

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Re: compensation and tax?
« Reply #2 on: 22 November 2012, 09:45:18 am »
if we got more than 30k would we pay tax on all of it or just on the amount over 30k?
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Pat

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Re: compensation and tax?
« Reply #3 on: 22 November 2012, 11:05:01 am »
Just the part over 30K, it's counted as earned income, so subject to tax & NI.
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chilly

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Re: compensation and tax?
« Reply #4 on: 22 November 2012, 11:49:56 am »
ta  :thumbup  its doubtful we will get over 30 but the solicitor said not to rule anything out ;)
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alan sherman

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Re: compensation and tax?
« Reply #5 on: 22 November 2012, 04:11:41 pm »
It is not a redundancy payout - it is compensation.  I believe it counts as income so you should probably do a self assessment for this tax year.  Best bet is to call HMRC to ask them, or an accountant.
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fazed600

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Re: compensation and tax?
« Reply #6 on: 22 November 2012, 09:28:58 pm »
Hopefully not - compensation is damages for loss, not earned income. What the company might try to do is compensate you for the earnings you were due to receive post-tax and not pre-tax, as this is effectively what you have "lost".
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