FTT rules on tax treatment of employment tribunal claim settlement payment

In L v Revenue and Customs Commissioners [2024] UKFTT 1044 (TC), the First-tier Tribunal (FTT) was required to ascertain the tax treatment of a payment made to the taxpayer by her former employer in settlement of her claim filed with the employment tribunal. The FTT held that, while some aspects of the payment were for the taxpayer’s past service and therefore taxable, that part of the payment apportioned and attributed to the taxpayer’s in-employment discrimination claim was not ‘from employment’ and was therefore not assessable under section 62 of the Income Tax (Earnings and Pensions) Act 2003 and, as HMRC accepted, it was not assessable on any other basis so fell outside the scope of income tax.

Pro Employment Law

Formed in 2017, following significant legislative changes designed to increase competition within the legal services marketplace, Pro Employment Law is a progressive set of barristers’ chambers, consisting only of experienced employment law barristers, offering a full range of specialist advisory, case management, and advocacy services directly to the public through the Public Access scheme. We supply our legal services exclusively in the area of Employment Law to clients located across England & Wales. All of the legal services we supply are covered by professional indemnity insurance with Bar Mutual.