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Gifts to two former employees were ‘from’ their employments

By Mark McLaughlin, April 2023

Monetary gifts to two former employees so they could repay loans previously made to them to pay up shares they had acquired as a result of their employment constituted taxable earnings from their former employment. 

The appellant company (GC) was the 100% subsidiary of another company (CIHL). In April 2015, the entire shareholding in CIHL was acquired by an American company (GCH). GC subsequently appealed against an income tax determination for the tax year 2014/15 on gifts made to two former employees (CC and RH) in October 2014. The issue was whether those gifts constituted earnings of CC and RH (under ITEPA 2003, s 62). 

The gifts to CC and RH were made so they could repay loans previously made to them to pay up shares they had acquired as a result of their employment. Those shares had fallen significantly in value because of the global financial crisis. The gifts were made in the context of GC being purchased by GCH. However, CC ceased to be an

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