Rawlinson v Revenue and Customs (INCOME TAX - earnings charge under s 62 ITEPA - termination payments - interaction between post-employment notice pay regime and disability exemption - termination due to disability - payment "on account of" disability - reason for termination separate from reason for payment) [2026] UKFTT 45 (TC) (08 January 2026)

Rawlinson v Revenue and Customs (INCOME TAX - earnings charge under s 62 ITEPA - termination payments - interaction between post-employment notice pay regime and disability exemption - termination due to disability - payment "on account of" disability - reason for termination separate from reason for payment) [2026] UKFTT 45 (TC) (08 January 2026)

The PILON was not taxable as earnings under s 62 ITEPA 2003 because it arose from the settlement agreement, not a pre-existing contractual right. However, the s 406(1)(b) disability exemption did not apply because the payment was made to discharge a contractual notice entitlement, not on account of disability. The Tribunal lacked jurisdiction as no valid appealable decision existed.

Citation
[2026] UKFTT 45
Parties
Appellant: Lawrence Rawlinson; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
08 January 2026
Procedural Posture
Tax Appeal (first Tier Tribunal, Tax Chamber) / Strike Out Application and Substantive Determination
Outcome
Appeal struck out for lack of jurisdiction
Legal Topics
Income Tax, Termination Payments, Disability Exemption, Jurisdiction, PAYE, PILON (payment in Lieu of Notice)
Tax Law Employment Law Income Tax Termination Payments Disability Exemption Jurisdiction PAYE PILON (payment in Lieu of Notice)

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Parties

Lawrence Rawlinson

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

Tax Appeal (first Tier Tribunal, Tax Chamber) / Strike Out Application and Substantive Determination

Legal Issues

  1. 1 Is the payment in lieu of notice (PILON) taxable under s 62 ITEPA 2003?
  2. 2 Does the disability exemption under s 406(1)(b) ITEPA 2003 apply to the PILON?
  3. 3 Does the Tribunal have jurisdiction to hear the appeal?

Ratio Decidendi

The PILON was not taxable as earnings under s 62 ITEPA 2003 because it arose from the settlement agreement, not a pre-existing contractual right. However, the s 406(1)(b) disability exemption did not apply because the payment was made to discharge a contractual notice entitlement, not on account of disability. The Tribunal lacked jurisdiction as no valid appealable decision existed.

Court Disposition

Appeal struck out for lack of jurisdiction

Orders

  • The appeal is struck out under Rule 8(2)(a) of The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.