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14A.5.1.1    Statutory Exclusions from Section 62

Statutory redundancy payments are excluded from section 62 (but not from section 403) by statute.¹¹⁷ Non-statutory redundancy payments are similarly excluded in practice if they are genuinely made on account of redundancy—whether the scheme is a standing one or an ad hoc arrangement to deal with a specific situation.¹¹⁸

14A.5.1.2    Statutory Exclusions from Section 62: Counselling and Other Outplacement and Retraining Benefits

Payments incurred by an employer in providing counselling and other outplacement services to an employee in connection with the ending of the office or employment are excluded from schedule E altogether.¹¹⁹ Otherwise they would give rise to a taxable benefit under section 201; the exclusion therefore also applies to the reimbursement of expenses incurred by the employee. There is a similar exemption for retraining courses.¹²⁰

14A.5.2    Case-law on Compensation Claims by Employees Against Employers

In 1950 Sir Raymond Evershed MR memorably described the line drawn by the cases in this area as ‘a little wobbly’.¹²¹ Nothing much has changed. He added that the taxpayer could not make the payment one by way of compensation for loss of office simply by using a formula; that is also still good law, indicating that the matter is to be treated as one of substance and not of words or labels.¹²² The following principles are relevant in this area:

1. A sum paid by way of commutation of pension rights does not fall within section 62 TA 1988, section 19.¹²³ This is not technically a matter which involves the compromise of a right arising under the contract of employment since, while the right may have its sources in such a contract, the pension itself is a taxable entity distinct from the office or employment.¹²⁴
2. A payment to compensate for loss of rights under a non-statutory redundancy scheme is not taxable because it simply compensates for the loss of payments that would themselves be non-taxable.¹²⁵ Compensation for loss

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