Ex gratia payments and tax

[Sunset54]

Hello, has anyone received an ex gratia payment and can you advise whether it was automatically not taxed or did you have to reclaim tax?

I’m due a payment and I’m worried they’ll take a huge chunk and I’ll be stuck calling HMRC trying to reclaim it back.

Whoever is paying you should not deduct tax from an ex gratia payment.

Thank you. Does anyone have to declare it to HMRC?

Yes, it must still be declared to HMRC.

@prh47bridge do I do that (call them up and let them know), does my ex employer or do I do a self assessment at the end of the year? Sorry, never had to deal with this before so clueless.

It will be paid as normal via PAYE. HMRC will know about it from the employer's monthly declarations. You shouldn't need to do anything abnormal.

Assuming your employer (or ex-employer) is making this payment, they should notify HMRC. They should deduct tax from any part of the payment that exceeds £30k.