This is a theoretical question, and not related to a specific Tribunal claim. I am trying to establish whether an award, say for over £30,000, is subject to tax (a) by the claimant and (b) by the employer?
The Tribunal Office Enquiry line couldn’t help, HMRC helpline said that tax would need to be paid although they would need to see the wording of the award before they could advise me, a fellow professional advised me that tax needs to be deducted before payment, and an Area Manager from ACAS advised me that awards are always paid net and no tax is due.
Does anyone have any specific experience in this area that could clarify the situation for me please?
I realise that when a Tribunal assesses loss of earnings, say for an unfair dismissal case, the net loss is assessed, so that would suggest that the claimant does not need to pay any tax. However, would the whole compensation amount be treated in the same way (eg a high discrimination award)?
Also, would there be any liability for tax or employer’s national insurance contributions on the employers part?
I’d appreciate any views?
Thanks
Debbie