The final arbiter in matters of tax is HM Revenue and Customs (HMRC).
Employers will always refrain from guaranteeing the tax status of the settlement package. It is possible that HMRC will audit the employer’s deductions of tax, and assess that more tax is due and request payment. To ward against this the employer will ensure that the employee is liable for any additional tax – the employer includes a tax indemnity in the settlement agreement such that the employee reimburses the employer for additional tax paid to HMRC.
The financial package that the employer pays to the employee on termination of employment comprises different elements. It includes, but is not necessarily limited to, the compensation payment. Tax treatment is different for each component of the overall package.:
When are they used? What is in them? Use our guide to understand more about settlement agreements
Depends on a variety of factors. We will advise about the particulars of your situation and explain how much compensation is appropriate
Is a settlement agreement offered when employees are redundant? Find out more on our redundancy pages
We seek to address your legal needs in a way that suits you. For certain matters we can offer a fixed fee arrangement. Learn more about costs with Aeon settlements
Discover more about the terms that the employer will include in the settlement agreement.