How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask bigduckontax Your Own Question

bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3132
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

I am entering a settlement agreement with my employee

Resolved Question:

Hi - I am entering a settlement agreement with my employee but there is a 5 month gap between initial signing and me leaving (legally there is two contracts). However my lawyer is concerned that the termination payment that would ordinarily be tax free to me, may incur tax due to the length of settlement. Please does anyone know if there is any reason for concern? (i.e. is it likely that the termination payment may not be treated as tax free due to the length of settlement? If so is there any guidance to how long/short this period should be in order for the termination payment to be treated as a tax free payment?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
The first 30K of a redundancy payment is tax free, the balance chargeable at your marginal rate of tax in the tax year the moneys are received. Redundancy payments should be received on the last day of employment. However, whenever it is paid redundancy pay is still redundancy pay! Any undue delay may make grounds for reference to an Employment Tribunal. Here is an useful comment from cityredundancies.co.uk:
'If there is to be any long delay with the payment, then that needs to be discussed and agreed with the employee. If the employee feels that they have to wait too long, then they can take the employer to an Employment Tribunal.'
I do hope that my reply has set your mind at rest.
Customer: replied 1 year ago.
Hi I am not sure if you have understood my question. It is not about delay in payment but that I am agreeing a settlement package and signing that initially but continuing to work for 5 months. The payment will be after I finish at the end of May. Are you saying that there is no reason the termination payment should not be tax free regardless of when it is agreed? i.e. That by continuing to work for five months after settlement is agreed will not affect the tax ability of the termination payment?
Expert:  bigduckontax replied 1 year ago.
Then as you leave you will receive your redundancy pay of which the first 30K is tax free. You should receive this on the last day of your service. The negotiations with your employer regarding the quantum of the redundancy payment and the timing of your cessation of employment are irrelevant.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3132
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Great thanks
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions