ITEPA 2003 (tax on Compromise Agreements and COT3s

James Fairchild
Member - 336 posts

Folks,

I am aware that, were a company to agree a compromise agreement with an employee, that the first £30,000 of the compensation payment (if I recall correctly) would be tax free. Legislation: Sections 401 - 416 of the Income Tax (Earnings and Pensions) Act 2003.

Does anyone know if this also applies to settlements negotiated by ACAS under a COT3 process?

The purpose for my question is that I need to understand whether the amount (which has been agreed as x times nett months' salary) also needs to have the gross parts paid over to HMRC or whether this can be legitimately avoided.

Thanks in anticipation