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Is a settlement or judgement taxable?

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If a wage-related dispute results in either a settlement or judgement, will the employer have to take tax off the amount recieved or is it otherwise taxable? Does the amount claimed have to be stipulated as being after tax?

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If you did not get paid and the employer insists you weren't entitled but then offers you an amount in settlement without admitting any liability, then would that settlement amount be considered taxable salary or non-taxable damages?

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My opinion is that it would be liquidated damages, and thus tax free.


No matter what anyone on this site tells you, the ultimate arbiter will be HMRC.


Why not ask them their opinion?



...................................................................... [FONT=Comic Sans MS]Please post on a thread before sending a PM. My opinion's are not expressed as agent or representative of The Consumer Action Group. Always seek professional advice from a qualified legal adviser before acting. If I have helped you please feel free to click on the black star.[/FONT] [FONT=Comic Sans MS] I am sorry that work means I don't get into the Employment Forum as often as I would like these days, but nonetheless I'll try to pop in when I can.[/FONT] [FONT=Arial Black][FONT=Comic Sans MS][COLOR=Red]'Venceremos' :wink:[/COLOR][/FONT][/FONT]

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