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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am offered a Settlement agreement but with myself and

Resolved Question:

I am offered a Settlement agreement but with myself and company splitting the tax advantage (instead of working my notice and being paid via PAYE) - is this splitting a normal thing?
Submitted: 25 days ago.
Category: Tax
Expert:  bigduckontax replied 25 days ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

I assume that you mean a Settlement Agreement to leave immediately with a lump sum instead of working out your notice.

Customer: replied 25 days ago.
Keith that's correct.
Customer: replied 25 days ago.
There is no question of non-performance or disciplinary, just company needing to cut costs.
Expert:  bigduckontax replied 25 days ago.

I have known it done before. The lump sum on redundancy has the first 30K tax free which is an obvious advantage to the departing employee than working out their notice under PAYE. The slight disadvantage is that for the departing employee is that there may be a short period for which they will not have their card stamped, to use an old expression. The employer will, of course, save on the employer's element of the NI for a similar period. The employee will not loose out if they apply for Jobseeker's Allowance immediately as the contributions are credited anyway.

I do hope that youi have found my reply of assistance.

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 25 days ago.
Ok thanks Keith.
Expert:  bigduckontax replied 25 days ago.

Delighted to have been of assistance.

Thank you for your support.