Hello I just received my settlement agreement, and would like some tax advice to understand whether I still need to pay tax. My job has been made redundant, and I disagreed resulting in a settlement agreement with help of ACAS. The settlement agreement is for 30,000 GBP. My employer has stated however in the settlement the following:
"settlement sum will be paid without deduction of income tax or National Insurance contributions pursuant to Chapter 3 of Part 6 of the Income Tax (Earnings and Pensions) Act 2003. The Claimant will be responsible for the payment of any additional tax and employee's National Insurance contributions (including any interest, penalties, costs and expenses) arising in respect of the settlement sum (the "Additional Tax"). The Claimant agrees to indemnify the Respondent (and all Group Companies) and to keep them indemnified on a continuing basis against all and any liability for the Additional Tax that the Respondent may incur."
Many thanks for your reply. The problem that I am facing in this matter is that my employer does not want to state the termination of my employment is due to redundant. In fact: in the settlement agreement there is no mentioning of redundant, only of 'termination of employment' and the settlement being for 'unfair dismissal'.
I am aware of a 30,000 cap for taxes on redundancies, however if the statement does not clearly state this, does it still impact the payments based on the referral to Income Tax (Earnings and Pensions) Act 2003, chapter 3.