In E.ON UK Plc v HMRC [2021] UKFTT 156 (TC) (15 May 2021) the FTT held that a ‘facilitation payment’ paid to employees of the company as part of an agreement under which they would in future pay increased pension contributions was taxable as earnings from employment.
The company wished to reduce the costs and risks associated with its pension schemes and following negotiations with unions and consultation with employees it put into effect an ‘integrated proposal’ under which its ‘retirement balance’ scheme would remain open but with increased future employee contributions. The proposal also provided for facilitation payments to those affected by the scheme changes pay awards for the following two years and a set of employment commitments by the company covering the following four years (for example committing the company to direct employment of its workforce and no further outsourcing). The facilitation...
