Termination payment: In Mrs A v HMRC [2022] UKFTT 421 (TC) (14 November 2022) the taxpayer agreed a compromise settlement with her employer for a sum in excess of £1m. A relatively small amount was agreed as non-taxable compensation for injury to feelings but the balance was subject to tax by the employer after giving allowance for the £30 000 exemption as a termination payment.
The taxpayer made a claim that the payment was made in exchange for her entering into confidentiality and non-disclosure agreements. As such she argued it fell outside tax altogether. It was not she said within the rules taxing payments for entering into restrictive undertakings as these applied only to restrictions on taking new jobs and no such restriction applied in this case.
The FTT disagreed and was clear that the payment was in exchange for giving a restrictive undertaking....
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