Tax FAQs

Financial Payment Tax FAQs

How will financial payments be made?

At this time, NHS Highland must process these payments via the payroll, for current or former colleagues.  We have written to HMRC to clarify the situation and should they  subsequently give a dispensation to process out with payroll, this will then be applied.

Will financial payments be taxed?

The payments are currently paid subject to applicable tax and national insurance deductions.  

At this time, NHS Highland are obliged to make payments via the payroll and deduct applicable tax and national insurance, on the basis of the tax and legal advice received and the specific and unique nature of the Healing Process.  This advice has come from the Shepherd and Wedderburn specialist legal team supporting the design and delivery of the Healing Process, who understand the scheme better than anyone else, and has come from both their employment and taxation lawyers. Whilst there has been discussion about whether these payments could be subject to a tax-free status for all or part of the payment and whether they should be paid outside payroll, we do not have a dispensation to do this and are obliged to process via payroll using existing tax codes, or one-time tax codes for those not currently employed unless and until a ruling from HMRC confirms that a different treatment should be applied.   As noted above, we have written to HMRC in this regard and await a response.

All payments have been appropriately taxed by NHS Highland on the basis of the current guidance and how PAYE operates.

How do I understand my position with regard to tax that has been deducted?

Tax is a personal matter and other factors influence the ultimate amount payable, which HMRC will only discuss with the individual.  In many cases, this could mean that an immediate refund of some of the tax is payable from HMRC, but NHS Highland cannot determine that and can only apply the process as set out. We continue to encourage all of those receiving payments to discuss their situation with HMRC in order to help them understand their own position. Your outcome letter will confirm the gross amount and you will be sent a payslip setting out tax and NICs deducted. All participants who have received a Healing Process outcome will have received an explanation of the tax position, and details of the NHS Highland Healing Process administration mailbox to direct any further queries to.

Why are Financial Payments from the Healing Process not tax free like settlement, termination or injury payments?

As set out above, the specific and unique features of the Healing Process mean these treatments which include some exemptions from tax cannot be applied as a starting point at this time.  For example, as payments are made to both current and ex-employees it would not be appropriate to treat them all as termination payments for tax purposes. We have written to HMRC and should we receive a dispensation to treat the payments differently without deductions in whole or in part, we will apply this going forward and HMRC will make retrospective adjustments for those already paid. It is understood that logistically, affected taxpayers would need to contact HMRC to request the adjustments.

Will a financial payment from the healing process impact my benefits?

We also note that any payment may impact benefit claims or receipt. Unfortunately, that is not a matter within our control.    We recommend those with concerns to seek advice and support from the Citizens Advice Bureau which can be obtained via online referral at https://www.cas.org.uk/.   They have confirmed they cannot support with tax advice and instead would have to refer to HMRC. There is also welfare advice available from Highland Council welfare.support@highland.gov.uk or 0800 090 1004 or in Argyll & Bute, there is an online referral form at Welfare Rights Enquiry Form (argyll-bute.gov.uk)or helpline on 01546 605517.

If I have received a payment and then the tax treatment changes, will I be refunded what was deducted?

In the event that NHS Highland receives a dispensation to process payments differently, this will also apply to all past payments and individuals will be able to reclaim the overpayments via HMRC (as above we understand that logistically, individuals will need to contact HMRC).  In this event, NHS Highland would contact all applicable participants with detailed information on next steps.

I am concerned about confidentiality, how will NHS Highland manage payments?

NHS Highland ensure access to information is kept to the absolutely minimum needed to process the payment and observe our financial and audit requirements and strict confidentiality is observed.  Further details are set out here.