Tax relief for negative earnings

Philip Fisher

In making his decision in the case of Martin v HMRC judge Howard Nowlan may offer hope to many taxpayers who are taxed on salary or bonuses from which they never ultimately benefit.

In the case of Martin v HMRC [2013] UKFTT 040 (TC) Mr Martin an employee was offered a refundable signing bonus of £250 000 on entering into a new contract with his employers. It was repayable on a sliding scale if employment ended within five years. Subsequently he left the company and repaid £162 500.

PAYE and NIC were accounted for on receipt of the bonus as one would expect. The problem came when HMRC denied Mr Martin tax relief for the £162 500 that he had refunded to his former employer.

As a consequence...

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In making his decision in the case of Martin v HMRC judge Howard Nowlan may offer hope to many taxpayers who are taxed on salary or bonuses from which they never ultimately benefit.

PAYE and NIC were accounted for on receipt of the bonus as one would expect. The problem came when HMRC denied Mr Martin tax relief for the £162 500 that he had refunded to his former employer.

As a consequence...

If you or your firm subscribes to Taxjournal.com, please click the login box below:

If you do not subscribe but are a registered user, please enter your details in the following boxes: