| Taxation of lump sum payment from former employer under a compromise agmt. [message #390150] |
Mi, 17 Mai 2006 12:29 |
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I recently agreed to resign from my former job following very serious
illness coupled with continuing disability [I now get higher rate DLA
and mobility allowance as well as incapacity benefit.] I'd been
employed continuously for 5 years+. I was paid a lump sum by said
employers under a compromise agreement and this was termed therein as
'compensation for loss of office' of which =A330,000 was paid taxfree
and the balance put through PAYE in m.12 of the 2005/6 tax year.
I'll need to complete the 'employment' bits of the selfassessment
paperwork recently sent out by local tax office and I've skimmed though
bits relating to redundancy etc. lump sums and I'm not sure how best to
describe all this on the form and whether it will set any alarm bells
ringing / hares running when local tax office scrutinise it. I was
reassured by my Trade Union official at the time of negotiating all
this that the first =A330,000 could be taxfree, but I'm aware that all
this is covered by some quite complex rules and I'm a bit jittery
because the compromise agreement involved an indemnity from me to my
former employers against their being asked by the tax authorities to
repay any PAYE and NIC - AFAIK such indemnities are standard wording in
solicitors' templates for such agreements.
Not sure if I'll need to get an accountant or suchlike to handle the
selfassessment on my behalf or whether I'll be ok doing this myself.
Any guidance about this would be very much appreciated.
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