Tax on settlement agreement

[DontTouchTheMoustache]

Hi everyone, I'm not sure if this is the best place to post this so I've popped it on a few boards. I was on mat leave this year but accepted a settlement agreement in September. The payment was tax free however I'm looking for work and will probably be starting in the next few weeks so still a few months of this tax year. What in wondering is:
a) does this settlement agreement form part of my personal allowance? I.e. when I start working and tax is worked out for the year would this payment be included in that working out by hmrc? And
b) is that settlement agreement considered by tax credits when working out what you are entitled to (because obviously the amount I expected to relieve for the year was less when I applied for tax credits as I did not know about the settlement agreement so if the sum.is included in will be a few thousand over what I estimated and will probably have to pay some back so I'd rather this wasn't a nasty surprise).
Thanks in advance if anyone can help or if you have a suggestion on where I should post where someone might know.

If it's tax free it doesn't count - only include what is shown on your p45 / you can't be penalised for redundancy

I have been through this whole saga myself - I made myself ill with the stress of it. I phoned tax credits and they were very helpful. Have you had your p45?

Thank you MrsS do you know if that's the case for both personal allowance and for tax credits?

I'm not sure actually, I don't know if I have, I can't remember getting it but I was moving house as it all happened so it's possible I filed it away without thinking.

Yes it is - everything literally goes on your p45/p60. Don't forget however that outstanding holiday entitlement will be taxable and will show so if that's part of your settlement figure do include that when letting tax credits know.

Also don't forget when declaring your figures that you can deduct £100 for each week of May pay for that financial year. E. Paid £5000 but 32 weeks were mat leave deduct £3200 from the figures you are declaring and state why and they will make a note of it

Thank you very much for your help in didn't know that about mat leave either. Really appreciate it as it has put my mind at rest!

No worries at all - you may find you've quite significantly under declared in light of this.

Hmrc will send your renewal through with your yearly income on it so when you do your renewal just deduct it from that