Recent Developments In Employment Tax Caselaw

There have been several recent cases of interest, including two which have considered cases which have been the subject of previous Law-Nows.

Discrimination payments

Two cases have recently confirmed that certain amounts payable in discrimination claims are entirely tax-free (and not subject to the normal £30,000 cap).

While it would be rare for both an employer and employee to want to construct a discrimination claim for this purpose (and only bona fide payments would benefit from the favourable treatment in any event), these cases confirm that payments for injury to feelings (as opposed to loss of future earnings etc or other financial claims) can be made entirely free of tax in termination of employment cases.