Unfair dismissal - a legal guide for union reps (November 2014)

Chapter 9

Tax

[ch 9: page 86]

A payment received as compensation for unfair dismissal under a settlement agreement is tax free up to £30,000, even if the employee is reinstated, as long as it is genuinely compensation for loss of the job rather than earnings or a payment for services (HM Inspector of Taxes v Clayton [2005] IRLR 108).


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