Question asked:


Hi Alan.
I am settling a case for unfair dismissal on behalf of two employees. The other side have agreed to pay the settlement in a tax efficient manner. I presume we can just structure the payment as a golden handshake and claim the basic and increeased exemptions?
There is a Personal Injuries claim in being athough proceedings have not issued. The settlement will be in respect of all claims including the PI claim, so can any excess (which will be relatively small) be treated as tax free in respect of the PI claim.

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Posted by (Questions: 8, Answers: 0)
Asked on 15 May 2013 4:52 pm
Private answer

1. Yes.
2. Revenue tend to be skeptical of tax-free personal injury settlements which accompany termination payments. If, for example, such a payment was to compensate a worker for loss of an arm through a factory accident, I don’t think there would be any dispute. If it’s for libel or slander or non-bodily injury, it would be harder and would depend on the specific facts.

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Posted by (Questions: 5, Answers: 5006)
Answered on 19 May 2013 1:37 pm