Cot3 settlement

[mrperfect]

Hi.Can anybody please give me some advice as to wether or not i have to pay tax and insurance on a out of court settlement from my ex employer.I have accepted the sum he has offered but he wants it to be paid out at Gross.The Net ammount i will receive will be almost half of the sum that i have accepted.I was dissmissed from his company due to ill health and am currently on Employment Support Allowance.

[charitynjw]

Re: Cot3 settlement

http://www.revenue.ie/en/tax/it/leaf....html#section4

Exemption from Income Tax - IT71

4. Out of Court settlements

Claims concerning the infringement of employees’ rights and entitlements and claims concerning employers’ obligations to employees may sometimes be settled by agreement without referral to a relevant authority. A payment made under such an agreement will also qualify for the exemption where all of the following conditions are met -

• the agreement in settlement of a claim is evidenced in writing;
• the agreement is not between ‘connected persons’ (e.g. employer and relative, employer and director);
• the claim would have been a bona fide claim under a relevant Act had it been made to a relevant authority ( e.g. sufficient grounds for the claim; claim is within the scope of one of the relevant acts; claim made within specified time limits, etc.);
• the claim is likely to have been the subject of a recommendation, decision or determination by a relevant authority that a payment be made to the person making the claim; and
• the payment does not exceed the maximum amount which could have been awarded under relevant legislation by the Rights Commissioner, Director of Equality Investigations, Employment Appeals Tribunal or Labour Court as appropriate (e.g. the maximum amount of compensation arising from a claim made under the Employment Equality Act, 1998 for acts of discrimination cannot exceed a sum calculated as being not greater than 104 weeks pay

See also Barden v Commodities Research Unit & Ors [2013] EWHC 1633 (Ch)