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One-off payment

21 October 2014
Issue: 4474 / Categories: Tax cases , Employees , Income Tax

G Forsyth (TC4029)

The taxpayer retired from Nestlé in 1995 but remained a member of the company’s healthcare scheme.

The business wrote to the taxpayer in October 2009, inviting him to leave the scheme in return for a one-off payment of £29,783. The taxpayer agreed; the payment was made to him after deduction of tax in January 2010.

He included the sum under “any other information” in his 2009/10 tax return, claiming it was compensation for the surrender of rights to medical care that should be treated as a payment of capital.

HMRC disagreed and assessed the sum to income tax. The taxpayer appealed.

The First-tier Tribunal said the payment was in connection with his past service with Nestlé, meaning the sum fell within ITEPA 2003, s 393B and was a “relevant benefit” provided under an employer-financed retirement benefits scheme. As such, it was liable to income tax under s 394.

The taxpayer’s appeal was dismissed.

Issue: 4474 / Categories: Tax cases , Employees , Income Tax
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