In P Hemingway v HMRC [2023] UKFTT 749 (TC) (5 September 2023) the FTT upheld HMRC’s view that employment-related securities rules override the tax exemption for termination payments.
Following a takeover on 1 February 2016 share options granted to employees in the target company were cancelled in return for a cash payment. Mr Hemingway an employee was paid £19 549.03 net of deductions in respect of a ‘notional share gain’. He then left the employment.
Mr Hemingway submitted a voluntary self-assessment tax return for 2015/16 which included the gain. He later amended the return to include the £30 000 exemption permitted under ITEPA 2003 s 401 (1)(c) for ‘a change in earnings from a person’s employment’. Use of this section is rare and would normally apply to commutations of periodic payments. The amendment meant that £16 240 of tax was not due.
HMRC made enquiry into...
