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Sam
Sam, Accountant
Category: Tax
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I am in the process of negotiating a Settlement Agreement

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I am in the process of negotiating a Settlement Agreement with my employer. I have asked for a leaving date of 31/3/2019 and a date for the SA payment 30 days later. Will the HMRC treat the payment as falling in financial year 19/20 or will they associate it with my previous employment and treat it as taxable income in FY18/19?

Hi, Sam here , one of the UK tax Experts here on Just Answer, thank you for your question and I shall reply shortly

Hi

As you leaving date is close to the year end - then you can get away with having the payment made after 06/04/2019 so it then falls into the new tax year. AS leaving payments are usually paid separate from the last salary payment anyway - so its just down to whether your employer will agree

Thanks

Sam

Customer: replied 3 months ago.
Thanks. My employer has agreed, in fact they structured the SA in this way. My question (just to fully clarify your answer) is will HMRC treat the payment as associated with the previous employment (obviously I will not be employed by hthe en) and ‘back date’ to the previous tax year?

Hi

Then this wil work out hopefully as a tax effcient way to proceed

No HMRC will of course treat it as connected but also will accept that the payment was made in the new tax year and consider the tax position on that basis

Thanks

Sam

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