HMRC v E.ON UK plc

In HMRC v E.ON UK plc [2023] EWCA Civ 1383 (28 November 2023) the Court of Appeal (CA) overturned the decision of the UT holding that a ‘facilitation payment’ made to employees who would have to pay increased future pension contributions was taxable as earnings from their 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' defined benefit 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...

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