Discussing UK law. Links: swarb.co.uk | law-index | Acts | Members Image galleries

Income tax on dispute settlement

Income, Corporation, Capital Gains, Inheritance Taxes, VAT and so on.

Income tax on dispute settlement

Postby Reco » Fri Nov 27, 2015 3:46 pm

Following a dismissal an issue of potential unfairness came to light the details on another thread (thanks to all who commented)

An arrangement was made after an in-person meeting a sum was agreed based on additional 6 weeks pay in lieu of notice.
Payment would come via payroll.

What was not expected was that it would be treated as new employment for November this year when the employment end date was 11th May

This was a payment in lieu of notice

when ought the tax point be properly placed I wonder?

Thanks in advance any ideas?
Reco
 
Posts: 24
Joined: Mon Feb 10, 2014 6:34 pm

Re: Income tax on dispute settlement

Postby atticus » Fri Nov 27, 2015 3:52 pm

Income is taxable in the year in which it is received.

If I have answered the wrong question, please re-phrase the question, as it could be a good deal clearer.
User avatar
atticus
 
Posts: 19541
Joined: Sun Nov 11, 2012 2:27 pm
Location: E&W

Re: Income tax on dispute settlement

Postby Reco » Fri Nov 27, 2015 4:35 pm

Employment ended 11 May this year
Long argument about unfairness concluded with an agreed payment.

The payment processed through payroll as salary for November and taxed on emergency code.
New P45 showing employment for the month of November.
I'm in receipt of means related payments from DWP etc.

I've already had student loans on the phone asking to up my payments re HMRC information and I can imagine what may follow.

And I'm wondering how to defend myself

I can easily get carried away with false accounting allegation and computer misuse malarkey

Hope this helps
Reco
 
Posts: 24
Joined: Mon Feb 10, 2014 6:34 pm

Re: Income tax on dispute settlement

Postby kvothe » Fri Nov 27, 2015 4:52 pm

Just a couple of observations - PILON payments may or may not be taxable dependent upon the circumstances giving rise to the termination and what is agreed between the parties and the terms of the employees contract of employment. If the payment is subject to income tax, under the real time reporting regulations (RTI), tax is deductible at the moment the payment is made to the employee. Ultimately, as the the dates mentioned in the opening entry are in the same tax year, any tax suffered will work itself out in the wash come the end of the tax year.
kvothe
 
Posts: 36
Joined: Tue Nov 20, 2012 9:51 am

Re: Income tax on dispute settlement

Postby Reco » Fri Nov 27, 2015 5:07 pm

Thanks
and I wasn't an employee when the payment authorized and I feel prejudiced by the company pretending I was.

Grrr
Reco
 
Posts: 24
Joined: Mon Feb 10, 2014 6:34 pm

Re: Income tax on dispute settlement

Postby atticus » Fri Nov 27, 2015 5:16 pm

This was a payment in lieu of notice to terminate employment. It should be paid in accordance with the arrangements for the employment that was being ended. This includes payment through payroll.
User avatar
atticus
 
Posts: 19541
Joined: Sun Nov 11, 2012 2:27 pm
Location: E&W

Re: Income tax on dispute settlement

Postby Reco » Fri Nov 27, 2015 6:18 pm

The way the P45 is it looks like I worked in November to HMRC

The final paperwork was a letter that specified "via next available payroll"
"Bringing all matters to a close regarding any payments owed to you".

I was asked to sign and return a copy of the letter....and did.
part of my complaint was that I was emotionally upset by the way I had been mistreated and part of me wanted to punish them
I posted about this as a potential defamation thread

In the end I believed that I let them off the hook for the sake of my sanity by accepting their offer.

"I confirm I accept the terms of this letter in full and final settlement of any and any claims I have against (Company Name)"
Reco
 
Posts: 24
Joined: Mon Feb 10, 2014 6:34 pm

Re: Income tax on dispute settlement

Postby Millbrook2 » Sat Nov 28, 2015 8:36 am

I'm struggling to see what you think the employer has done wrong given the payment has been made in the same tax year and why there should be any problems caused by this.
Millbrook2
 
Posts: 762
Joined: Tue Nov 27, 2012 9:05 am

Re: Income tax on dispute settlement

Postby dls » Sat Nov 28, 2015 9:24 am

And I struggle why you feel uncomfortable with your acceptance of the offer. One of the wisest things you can do is to settle and get back to living a life withe dispute as a disappearing memory.

Though not that you shouldn't stick around.
David Swarbrick (Admin) dswarb@gmail.com - 0795 457 9992
User avatar
dls
Site Admin
 
Posts: 12135
Joined: Thu Nov 01, 2012 1:35 pm
Location: Brighouse, West Yorkshire

Re: Income tax on dispute settlement

Postby Reco » Tue Dec 08, 2015 10:59 am

Yes thanks I've now requested and received a letter explaining the payment as part of previous employment.

the matter is now closed

Thanks for all responses
Reco
 
Posts: 24
Joined: Mon Feb 10, 2014 6:34 pm


Return to Tax

Who is online

Users browsing this forum: No registered users and 1 guest