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taxpayer’s. Finlay J held that the payments made by the company constituted money’s worth to the taxpayer, who was therefore taxable.50 |
However, Nicoll v Austin does not apply if, after leaving the employer and before being used to discharge the liability of the employee, it has become the income of someone else. In Barclays Bank Ltd v Naylor51 payments were made into the bank account of a child of the employee out of a discretionary trust set up by the employer to help with employees’ school fees. Cross J held that the payments had become the income of the child, and the fact that income had been used to discharge the father’s legal obligation to pay the school fees was insufficient to turn the income of the child into the income of the parent. |
The rule in Nicoll v Austin must be taken as subject to all the categories of exempt income gathered together in ITEPA part 4; so a payment of an expense in connection with the provision of a parking place does not give rise to tax.52 |
14A.4 Examples of General Principles |
The question whether a particular receipt arises from the employer–employee relationship or from something else has been much explored in the case-law. Clearly, the more cogent the ‘something else’ is, the more chance a taxpayer has of arguing that the payment falls outside section 62. |
14A.4.1 General |
Payments for services include not only ordinary wages and salaries but also less obvious payments, such as those to mark a period of service with the employer53 and bonus payments whether or not contracted for54 and even if paid at Christmas.55 A sum paid ‘to preserve an employer’s good name and good staff relations’ was held to be taxable even though it was designed to compensate staff for the withdrawal of a benefit in kind.56 |