L v Revenue and Customs (INCOME TAX - relevant amount of settlement payment received from previous employer which is assessable to income tax) [2024] UKFTT 1044 (TC) (18 November 2024)

L v Revenue and Customs (INCOME TAX - relevant amount of settlement payment received from previous employer which is assessable to income tax) [2024] UKFTT 1044 (TC) (18 November 2024)

Settlement payments for deferred compensation and equal pay are taxable as employment income under section 62 ITEPA. Compensation for lost opportunity due to in-work discrimination is not taxable as it is not a reward for services rendered. Compensation for injury to feelings is not taxable.

Citation
[2024] UKFTT 1044
Parties
Appellant: L; Respondents: THE COMMISSIONERS FOR HIS MAJESTY'S REVENUE AND CUSTOMS
Jurisdiction
United Kingdom
Judgment Date
18 November 2024
Procedural Posture
Income Tax Appeal / Final Judgment
Outcome
Appeal allowed in part
Legal Topics
Income Tax on Settlement Payments, Employment Discrimination, Equal Pay, Taxation of Damages, Termination Payments
Tax Law Employment Law Equality Law Income Tax on Settlement Payments Employment Discrimination Equal Pay Taxation of Damages Termination Payments

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Parties

L

Appellant

THE COMMISSIONERS FOR HIS MAJESTY'S REVENUE AND CUSTOMS

Respondents

Procedural Posture

Income Tax Appeal / Final Judgment

Legal Issues

  1. 1 Whether settlement payments for in-work discrimination are taxable as earnings under section 62 ITEPA
  2. 2 Whether deferred compensation and equal pay components are taxable as employment income
  3. 3 Whether compensation for lost opportunity due to discrimination is taxable

Ratio Decidendi

Settlement payments for deferred compensation and equal pay are taxable as employment income under section 62 ITEPA. Compensation for lost opportunity due to in-work discrimination is not taxable as it is not a reward for services rendered. Compensation for injury to feelings is not taxable.

Court Disposition

Appeal allowed in part

Orders

  • Amendment to Appellant's self-assessment for tax year ended 5 April 2015 to be reduced; only deferred compensation, equal pay, and termination payments above £30,000 threshold are taxable; compensation for in-work discrimination and injury to feelings not taxable