Lawrence Rawlinson v The Commissioners for HMRC
Decision date: 8 January 2026
Neutral citation: [2026] UKFTT 45 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
Mr Rawlinson’s employment ended under a settlement agreement which provided a £15,000 payment in lieu of notice (PILON) subject to PAYE and a separate tax-free £15,000 termination payment. The First-tier Tribunal found the PILON did not constitute earnings under s 62 ITEPA because it was agreed as part of the termination process, but also held the s 406(1)(b) disability exemption did not apply because the payment was made to discharge the employer’s notice obligation rather than being made on account of his disability. The appeal was struck out for lack of jurisdiction as premature; the Tribunal stated that, if it had jurisdiction, it would have dismissed the substantive appeal.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where a payment in lieu of notice is agreed as part of the termination process rather than arising from a pre-existing contractual right, it may fall outside the s 62 ITEPA definition of earnings; and the s 406(1)(b) disability exemption requires both an objectively relevant disability and that the payer’s proximate motive for the specific payment was that it was made on account of that disability.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal indicated it may draw inferences about a payer’s subjective motive from primary factual evidence even if the settlement agreement does not expressly record the reason for the payment, and noted its substantive reasoning is non-binding given the lack of jurisdiction but may nonetheless assist future proceedings.