The Court of Appeal has confirmed that payments to employees on a TUPE transfer made partly to compensate for the loss of pension rights and partly as an incentive for the employees to work willingly and without industrial action were fully taxable as employment income.
If a payment has arisen at least in part from the employment, then it is taxable as employment income even if there was another reason such as to compensate lost pension rights (which, if it were theonly reason, would mean a different tax treatment). Employers should therefore expressly split any such payment between the various grounds so that each part can be taxed appropriately. (Kuehne + Nagel Drinks Logistics Ltd, Stott and Joyce v HMRC, CA).
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Steve Bell
Managing Partner - Employment, Industrial Relations and Safety (Australia, Asia), Melbourne
Emma Rohsler
Regional Head of Practice (EMEA) - Employment Pensions and Incentives, Paris
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