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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 14872
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I was wondering if you can advise on a tax related question

Customer Question

Hi there, I was wondering if you can advise on a tax related question around a settlement agreement?
JA: Have you talked to a tax professional about this?
Customer: no
JA: Anything else you want the Accountant to know before I connect you?
Customer: will i be charged?
Submitted: 15 days ago.
Category: Tax
Customer: replied 15 days ago.
I was originally offered a settlement deal which was a 1 month salary which was taxable, plus a lump sum of £21,000 excempt of tax.
My annual salary is £60k.

The company have since said they must pay me three months taxabale and have changed the offer to 3 months salary taxable, and £12k tax free.

based on my normal take home salary, the second deal works out less than the original offer? However I wanted to check that with someone who knows more about how tax and NI is calculated.

Additionally, do Student Loans get paid on any of the payments being made - I'm assuming the taxable element is subject to student loan deductions too?
Expert:  Sam replied 14 days ago.

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

Expert:  Sam replied 14 days ago.

First student loans are not taken out of any lump sum but HMRC will make a demand of a payment through self assessment, thenw e have the lump sum why is this being paid and do you have a contractual right to three months notice ? Thanks Sam

 

 

 

Customer: replied 14 days ago.
Hi Sam, yes my employment contract is 3 months notice.
The lump sum payment is part of a settlement agreement where it was agreed I would be paid the equivalent of 6 months take home salary plus my 1k employee referral bonus. Are you able to ad use on what the take home pay would be in both offers?
Expert:  Sam replied 14 days ago.

 

 

 

Hi

Then that is why they have to pay you three months as taxable as you have a contractual right to receive it and therefore the blance (to make it up to the agreed 6 months) can be paid tax free - if you want me to work out the tax and National Insurance please advise 1) Total pay to date 2)the tax paid to date and 3) the tax code operating against your pay - Thanks Sam