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HMRC internal manual

Employment Income Manual

Employment income: earnings from employment: sums paid to an employee for not resigning, or for continuing to serve in the employment

Section 62 ITEPA 2003

A sum paid by an employer, or by a third party, to encourage an employee to continue in the employment is taxable as earnings within Section 62 ITEPA 2003 (see EIM00510). Such payments may be made where, for example, adirector wishes to retire and is paid a lump sum for continuing in office, perhaps with reduced hours or duties.

Cases illustrating this point are:

  • Prendergast v Cameron (23TC122) (see example EIM00655)
  • Wales v Tilley (25TC136)
  • Wilson v Daniels (25TC473)