Do I need to pay tax on compensation for loss of trade/income?

[Antonbool]

Hi All,

I am new to this site and I have a query regarding some compensation I received very recently.

I have been working for a company that went under administration. During the period the company was under administration I was approached by a Norwegian company that wanted to seize the opportunity and get hold of the technology by means of employing myself (CTO) and some of the members of staff.

They asked me to stay until my company was shut and help with the products that were going through the shop floor at the time, since the products were of a mutual customer. They also promised me that in the end of this, I would start a design office for them, employing the people I needed.

I followed their request, turning down other job offers (finding a job at my level can be very cumbersome and time consuming), staying until the closure of my previous company and putting a notice in for the property I was staying at the time.

As it turned out their plans did not come to fruition and I was left hanging...

However they acknowledged their mistake and agreed to pay me a compensation for my losses.

My questions are:

-Do I need to declare the funds to the taxman? If yes how?

-Are the funds subject to taxation? If not why?

Many Thanks in Advance,

Anton

[bd6759]

Probably taxable because it is in connection with your employment or proposed employment.

[Antonbool]

Hi,

I was under the impression that because the compensation was awarded due to total loss of income, the first £500000 would not be subject to taxation.

[bd6759]

Possibly charged under s401, which would exempt the first £30,000. I have never heard if a £500,000 limit for any form of payment,