This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Tax on Settlement Agreement

anonman123
Posts:1
Joined:Mon Jul 22, 2024 3:08 pm
Tax on Settlement Agreement

Postby anonman123 » Mon Jul 22, 2024 3:19 pm

I was let go from work on a 'Settlement agreement' which basically means that they would pay me 6 months worth of my annual salary. I have a question regarding how it was taxed and want to know if I am due any tax. My financial details are as below:

March 2024 - Received final pay (seemed ok)
April 2024 - Received settlement payment

My salary was £44k, which means I would be paid £22k minus any taxes. The amount I actually received in April was £11,268.38

My take-home pay for the months prior was £2,592 per month. I assumed my take-home pay from the settlement would be 6 times this, which would mean I should be paid around £15,552.

Then I got a new job in May 2024. I informed HMRC and they said I would be taxed more going forwards because the £22k would be treated as additional to my current income at my new employer. I understand this, but I thought I should be receiving a tax rebate because I believe I was initially over taxed.

Could someone clarify if I was over-taxed or if the amount I received looks correct?

Return to “PAYE and Payroll Taxes, National Insurance, NICs”