Tax on a settlement agreement

johnsof75

I have raised a claim against my employer for disability discrimination. ACAS say they have offered £50,000 subject to terms to settle the employment tribunal claim (I would remain their employee). I would like to know what tax I would pay on this amount - i.e. what, roughly,  would I actually receive in my bank account (my employers haven't broken down the offer amount beyond saying it is £50,000 for me to withdraw the claim). 

My solicitor says they are unable to advise as that isn't their specialism - they are an employment lawyer. I wrote to HMRC but they have today replied saying they cannot advise. Unfortunately I cannot afford to pay for an accountant (I have paid a fortune in legal costs). Is it possible to get advice on the tax implications elsewhere  - as I am a higher rate tax payer and sill employed do you think I would have to pay 40% tax on the full amount? Are there any ways of making it tax efficient or do I just have to soak it up? Thank you. 

Mark_d

As the employment is not being terminated I believe the the whole £50k will be charged at your marginal rates of tax and NI. You should be able to pay some or all of this into pension to maximise tax efficiency

johnsof75

Thank you all so much. So far my employer has refused to break down the amount they are offering. They just say it is an offer for me to not proceed with the claim but is not an admission of guilt rather it is to avoid them having to pay legal fees if the case were to continue. 

The claim was for disability discrimination -it's a  complex case, but in summary I was kept on nil pay for over a year.  In my schedule of loss I was claiming predominantly for loss of earnings. This was during a previous financial year, I didn't have any other income so would have had tax allowances etc.