Settlement Agreement Taxation

[SamSmith123]

Hi, I’m looking for some advice around a settlement agreement if anyone can help. The basic facts are:

1. I brought an ET against my employer after whistleblowing.
2. I was subsequently subjected to a number of detriments.
3. My employer has made me a financial offer to settle the claim, which I am broadly happy with.
4. The claim was for injury to feelings. I have no financial loss as I have remained in their employment throughout.
5. Crucially, I will also be remaining in their employment after the settlement.

My main question is, is the financial payment taxable? I have found loads of info online about payments after termination of employment but very little about payments after which you remain in the same employment. To re-iterate, the payment is not in-lieu of wages or holiday pay or anything like that, it is for injury to feelings and psychological injury as a result of my treatment as a whistleblower.

Thanks in advance

Sam

[ULA]

There is a category of tax called ‘disability exemption’ which applies when an employee is compensated for damages resulting from a psychiatric injury caused by unlawful discrimination at work. If the injury happened before employment ends then it is tax free.

However this relates to whistleblowing so I am not sure this exemption would apply.

[SamSmith123]

Thanks, does anyone else have a view please?

My research seems to suggest that a whistleblowing detriment claim is classed as discrimination and therefore tax free when not linked to termination of employment.

[SamSmith123]

Thanks, does anyone else have a view please?

My research seems to suggest that a whistleblowing detriment claim is classed as discrimination and therefore tax free when not linked to termination of employment.

[ULA]

You may need to consider calling HMRC.