Ben Everson v The Commissioners for HMRC
Decision date: 28 November 2024
Neutral citation: [2026] UKFTT 978 (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
This appeal concerned whether £165,750 of a £183,750 settlement paid to Mr Everson on termination of employment was a taxable termination payment under ITEPA ss 401/403, and whether any part was exempt under s 406 as paid on account of injury or disability. The First-tier Tribunal found the whole disputed sum (less the £18,000 allocated to injury-to-feelings and the £30,000 s 403 exemption) was connected to the termination and therefore taxable; the s 406 exemption did not apply beyond the £18,000 and the closure notice was upheld. The appeal was dismissed.
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
A payment made as part of a settlement will fall within ITEPA s 401 if it is received "directly or indirectly in consideration of, in consequence of, or otherwise in connection with" the termination; that connection is assessed holistically and does not require a narrow or technical causation test or inquiry into the payer's motive. Section 406 is a limited, objective exemption that only removes amounts paid on account of injury or disability; mere assertions without evidence that injury/disability was the reason for payment will not satisfy s 406.
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 noted that where a global settlement covers multiple heads of claim, apportionment between taxable (termination-connected) and non-taxable elements is a factual exercise for which the claimant bears the burden of proof. It also observed that Vento bands remain a practical guide when assessing injury-to-feelings awards within settlements, so large claimed exemptions on that basis will attract scrutiny.