Compromise payment not taxable

The High Court decided in Wilson (HM Inspector of Taxes) v Claytonthat a payment from an employer under a compromise agreement should be treated as a termination payment under s.403 of the Income (Earnings and Pensions) Act 2003 (formerly s.148 Income and Corporation Taxes Act 1988) - not taxable unless it exceeds £30,000 (see Payment under compromise agreement not taxable). The Court of Appeal, on 7 December 2004 (Judgment available at: www.civilappeals.gov.uk), rejected an appeal by the Inland Revenue against that decision for the same reasons as given in the High Court.