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+--- Thread: compensation and tax? (/showthread.php?tid=60996)
compensation and tax? - chilly - 22-11-12
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.
Re: compensation and tax? - Pat - 22-11-12
Redundancy is tax free for the first £30k.
Re: compensation and tax? - chilly - 22-11-12
if we got more than 30k would we pay tax on all of it or just on the amount over 30k?
Re: compensation and tax? - Pat - 22-11-12
Just the part over 30K, it's counted as earned income, so subject to tax & NI.
Re: compensation and tax? - chilly - 22-11-12
ta :thumbup its doubtful we will get over 30 but the solicitor said not to rule anything out
Re: compensation and tax? - alan sherman - 22-11-12
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.
Re: compensation and tax? - fazed600 - 22-11-12
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".