Interest and tax 





If the sum awarded remains unpaid 42 days after the tribunal decision, interest is payable on amounts outstanding.





A compensation payment for unfair dismissal under a compromise agreement is tax free up to £30,000 even if the employee is reinstated, as long as it is genuine compensation for loss of the job, rather than earnings or a payment for services (HM Inspector of Taxes v Clayton [2005] IRLR 108). Any amount over £30,000 is subject to income tax (but not currently employer National Insurance contributions (NICs)). 





A government plan to charge Employer NICs on all termination payments over £30,000 has been delayed until April 2020. 




The rules on the taxation of notice payments changed from April 2018. See page 333.