| Employment Income: Emoluments |
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last type would be taxable.11 Unfortunately, this example was premised on the view that the indemnity would be by way of reward for services, a premise which automatically makes the sum taxable. Lord Denning went on to say that the sum would be taxable because the losses were ‘his own affair’ and nothing to do with his employment, but this would be no less true of the hypothetical bereavement. |
| 14A.1.3 Shilton v Wilmshurst12 |
This case concerned the transfer of Peter Shilton, then and for a long time thereafter the England football team’s goalkeeper, from Nottingham Forest to Southampton in 1982. As part of the deal, Nottingham Forest paid Shilton a fee of £75,000 as an inducement to leave the club—and so go off its payroll. The Court of Appeal and Morritt J held that the sum was not taxable. The emolument had to be referable to the performance of services by the employee under the contract of employment. The House of Lords took a different view. Lord Templeman said:13 |
‘‘Section [62] is not confined to ‘emoluments from the employer’ but embraces all ‘emoluments from employment’; the section must therefore comprehend an emolument provided by a third party, a person who is not the employer. Section [62] is not limited to emoluments provided in the course of the employment; the section must therefore apply first to an emolument which is paid as a reward for past services and as an inducement to continue to perform services and, second, to an emolument which is paid as an inducement to enter into a contract of employment and to perform services in the future. The result is that an emolument ‘from employment’ means an emolument ‘from being or becoming an employee’. The authorities are consistent with this analysis and are concerned to distinguish in each case between an emolument which is derived from being or becoming an employee on the one hand and an emolument which is attributable to something else on the other hand, for example from a desire on the part of the provider of the emolument to relieve distress or provide assistance to a home buyer. If an emolument is not paid as a reward for past services or as an inducement to enter into employment and to provide future service but is paid for some other reason, then the emolument is not received ‘from the employment’.’’ |
It is not clear to what extent this formulation is meant to be a summary of existing case-law and to what extent it is meant to mark a new point of departure, but it shows how far the law had developed since 1959. This made |