Are out of court settlements taxable?

[ritemaster]

I would ask my solicitor but they shut till morning and its bugging me now

My solicitor put together on offer with figures based on earnings after tax. It's just occurred to me that if the settlement is taxable then I will end up with less than the earnings I have actually lost.

This is in relation to an employment tribunal.

[FlamingParrot]

Re: Are out of court settlements taxable?

Only awards over £30,000 are taxable, however, certain things like unpaid wages and payment in lieu of notice can be taxed.

There is a difference between an award and a settlement. A settlement would be a sum your employer would offer you to end the claim without going to a final hearing, usually involving ACAS and a COT3 agreement. An award is the sum of money the tribunal decides you are entitled to after winning your case. If you have claimed benefits such as JSA, ESA or income support, the amount you've claimed will be deducted from your award (although the respondent still has to pay the full amount awarded, the amount you received in benefits goes back to the government). That doesn't apply to a settlement offer from your ex-employer. HB is not repaid.

The schedule of loss will usually ask for as much as you can in terms of compensatory award, however, tribunals don't always award the full amount and they will also want to see that you have done as much as you can to mitigate your loss, in terms of actively seeking work. Not being able to satisfy them that you've done your utmost to find work will result in a reduction to any award.

[ritemaster]

Re: Are out of court settlements taxable?

Thank you. I can go sleep now