Michael Saunders v The Commissioners for HMRC

Michael Saunders v The Commissioners for HMRC

The payment received by the appellant under the SAR Agreement after cessation of employment and UK residency constitutes taxable employment income under s.62 ITEPA 2003, as it was earned for services performed while UK resident and is not attributable solely to the overseas part of the split year; the SARs did not constitute a monetarisable right at grant comparable to share options in Abbott v Philbin, and the payment is taxable in the year of receipt.

Parties
Appellant: Michael Saunders; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
31 October 2025
Procedural Posture
Appeal / Upper Tribunal Judgment
Outcome
Appeal dismissed
Legal Topics
Income Tax, Employment Income, Split Year Treatment, Long Term Incentive Plan, Stock Appreciation Rights
Tax Law Income Tax Employment Income Split Year Treatment Long Term Incentive Plan Stock Appreciation Rights

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Parties

Michael Saunders

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Appeal / Upper Tribunal Judgment

Legal Issues

  1. 1 Whether payment received under SARs after cessation of employment and UK residency constitutes taxable employment income under s.62 ITEPA 2003
  2. 2 Whether payment is attributable to the overseas part of a split year under ss.15-16 ITEPA 2003

Ratio Decidendi

The payment received by the appellant under the SAR Agreement after cessation of employment and UK residency constitutes taxable employment income under s.62 ITEPA 2003, as it was earned for services performed while UK resident and is not attributable solely to the overseas part of the split year; the SARs did not constitute a monetarisable right at grant comparable to share options in Abbott v Philbin, and the payment is taxable in the year of receipt.

Court Disposition

Appeal dismissed

Orders

  • Any application for costs must be made in writing within one month after the date of release of this decision and be accompanied by a schedule of costs claimed.