Personally I would go to an accountant for advice and suggestions on tax planning. CRA are only going to recite the rules not the solutions.

I've got a tax consultant looking into it for me and I should know for sure what the outcome is by the end of this week, we've got fingers,legs,arms and eyes crossed that it works out for us, I'll be back on with the results if I don't jump of the nearest bridge first!!

Oops I'm not trying to encourage suicide as a resolution for tax worries folks, so don't try this at home

Well it seems We're in the clear, due to going over my wifes severance paper work and finally finding her p45 and payslips in one of our many unpacked boxes, then taking it all down to an accountant, it appears that the payment isn't taken as income earned, it doesn't even show in our paper work from the inland revenue dated the month after settlement, thus making it non-taxable and not part of our income.

To say we're over the moon is an understatement, thanks to all who replied with some possitive info, and those who weren't as helpful....... cheers for taking part anyway

Honestly thanks to everyone.