Settlement (compromise) agreements

Produced by Tolley in association with

Employment Tax

Guidance

An agreement can be entered into by an employee and employer to end the employment on the terms set out within the agreement called a settlement agreement (known as a compromise agreement until 29 July 2013). This has specific legal meaning, in particular, applying where an employee has potential claims against the employer under the Employment Rights Act 1996 or other employment legislation, or where the employee would otherwise have a claim for breach of contract. Key managers and shareholders may sign settlement agreements if they leave employment when the employing company is sold.

The main reason for entering into a settlement agreement is that the employer has certainty that the employee will have no claim in the future against the employer.

Among other things, the settlement agreement will set out all payments and benefits due to the employee from the employer. This guidance note addresses the employment tax implications of a settlement agreement. Legal advice should be taken on all other aspects of the agreement. See Simon’s Taxes E4.823.

Whilst

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Sue El Hachmi

Senior Associate at Osborne Clarke

Sue advises on the design and implementation of employee incentive arrangements for private and public companies, including all types of tax-advantaged plans and bespoke arrangements for senior executives and management.Sue also advises on the incentive-related aspects of corporate transactions and has experience of private equity transactions and public company takeovers, flotations and demergers.Sue is a member of the Share Plan Lawyers Group and a member of the UK BioIndustry Association Finance and Tax Advisory Committee.

Popular Articles

Corporation Tax

FRS 102 ― tax presentation and disclosures

FRS 102 ― tax presentation and disclosuresPresentation of tax under FRS 102An entity must present changes in a current tax liability (or asset) and changes in a deferred tax liability (or asset) as a tax expense (or income) unless the item creating the current or deferred tax amount is recognised in

14 Jul 2020 11:46 | Produced by Tolley in association with Malcolm Greenbaum Read more

Owner-Managed Businesses

Repairs and renewals

Repairs and renewalsThe key consideration in determining whether expenditure on repairs and renewals is allowable as a deduction for tax purposes is whether it is capital or revenue in nature. In some cases, it can be relatively straightforward to identify revenue repairs. HMRC provides the

14 Jul 2020 13:23 | Produced by Tolley Read more

Employment Tax

Parking provision and expenses

Parking provision and expensesCar parking facilities at or near to the employee’s workplaceThere is an exemption from tax and NIC where an employer provides parking, or pays for or reimburses an employee for the costs associated with car parking at or near the place of work; there are no reporting

14 Jul 2020 11:09 | Produced by Tolley Read more

UU��ֱ��