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Payments to employees on change of pension scheme terms were ‘from’ employment

By Mark McLaughlin, February 2024

Payments by a company to its employees upon a change to the terms and conditions of a pension scheme were ‘from’ the employment so were liable to income tax and National Insurance contributions. 

Summary 

Payments by a company to its employees upon a change to the terms and conditions of a pension scheme were ‘from’ the employment so were liable to income tax and National Insurance contributions (NICs). 

Background 

New employees of the respondent company (E) were (since 2008) eligible to join a defined contribution pension scheme. Before then, employees were invited to join a retirement balance arrangement (earlier still, employees had been enrolled in a traditional final salary scheme). The retirement balance and final salary arrangements were regarded by E as separate ‘categories’ of membership of the same defined benefit scheme. In 2018, E’s

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