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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, a director 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)